What Do Hedge Funds Think of YuMe Inc (YUME)?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of YuMe Inc (NYSE:YUME) based on that data.

Is YuMe Inc (NYSE:YUME) the right investment to pursue these days? The smart money is taking a pessimistic view. The number of bullish hedge fund bets were cut by 4 recently. YUME was in 5 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with YUME holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Fuel Systems Solutions, Inc. (NASDAQ:FSYS), Atlantic Coast Financial Corp (NASDAQ:ACFC), and PharmAthene, Inc. (NYSEMKT:PIP) to gather more data points.

In the eyes of most market participants, hedge funds are perceived as worthless, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open at the moment, Our experts hone in on the leaders of this club, approximately 700 funds. These hedge fund managers oversee most of the hedge fund industry’s total asset base, and by watching their matchless stock picks, Insider Monkey has unearthed a number of investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, let’s take a look at the recent action surrounding YuMe Inc (NYSE:YUME).

What have hedge funds been doing with YuMe Inc (NYSE:YUME)?

At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -44% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in YuMe Inc (NYSE:YUME). Royce & Associates has a $1.3 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $0.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish encompass D. E. Shaw’s D E Shaw, Mario Gabelli’s GAMCO Investors and Israel Englander’s Millennium Management.

Judging by the fact that YuMe Inc (NYSE:YUME) has faced a declination in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedgies that decided to sell off their full holdings in the third quarter. At the top of the heap, Mark N. Diker’s Diker Management sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, worth an estimated $9.8 million in stock, and Brian C. Freckmann’s Lyon Street Capital was right behind this move, as the fund said goodbye to about $1.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as YuMe Inc (NYSE:YUME) but similarly valued. These stocks are Fuel Systems Solutions, Inc. (NASDAQ:FSYS), Atlantic Coast Financial Corp (NASDAQ:ACFC), PharmAthene, Inc. (NYSEMKT:PIP), and OHA Investment Corp (NASDAQ:OHAI). This group of stocks’ market valuations match YUME’s market valuation.

As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $2 million in YUME’s case. PharmAthene, Inc. (NYSEMKT:PIP) is the most popular stock in this table. On the other hand Atlantic Coast Financial Corp (NASDAQ:ACFC) is the least popular one with only 4 bullish hedge fund positions. YuMe Inc (NYSE:YUME) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PIP might be a better candidate to consider a long position.