William Martin’s Raging Capital Management has recently filled a Schedule 13D form regarding MRV Communications Inc. (NASDAQ:MRVC). The hedge fund firm disclosed owning 2.14 million shares in the California-based communications equipment and services company, which represent 30.6% of the company’s outstanding common stock. The disclosure reveals that Raging Capital Management has acquired 601,200 shares since the most recent 13F filing submitted with the SEC for the reporting period of March 31. As stated by the 13D filing, the aggregate purchase price of all the shares currently owned by the fund amounts to $37.70 million, including brokerage fees. The current market value of the stake is just over $25.62 million, meaning the investment has been a rather unprofitable one thus far for Martin.
Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activity. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 85 percentage points since the end of August 2012. These stocks returned a cumulative of 145% vs. less than 60% for the S&P 500 Index (read the details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
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Raging Capital Management is a New Jersey-based long/short equity hedge fund firm founded by William Charles Martin in April 2006. Martin currently serves as the Chairman, Chief Investment Officer, and Managing Member at the investment firm and is backed by an experienced investment team that has expertise across a range of disciplines. He is a very experienced investor, entrepreneur, and public company director with a sound track record. Martin previously established a few financial information and internet media companies during his career as an entrepreneur, including Raging Bull in 1997. Therefore, it is highly likely that the aforementioned stock pick, MRV Communications, represents a great buying opportunity considering Martin’s expertise in the industry MRV is operating in. Martin’s track record as an investor has also been good, as his hedge fund firm has delivered an annualized returns of 25% since its inception. According to the most recent 13F filing, Raging Capital Management’s public equity portfolio is worth $745.13 million as of March 31. Besides discussing William Martin’s recent move in MRV Communications Inc. (NASDAQ:MRVC), we’ll also cover three of his other top stock picks, which include the following companies: Vitesse Semiconductor Corp. (NASDAQ:VTSS), Range Resources Corporation (NYSE:RRC) and Ply Gem Holdings Inc (NYSE:PGEM).
MRV Communications Inc. (NASDAQ:MRVC) is a global supplier of innovative and optical solutions that power the network integration services for leading communications service providers. The company has primarily focused on its Network Equipment business, as it has seen multiple growth opportunities along its way. MRV Communications has developed a few products intended to meet the fast-growing demand for cloud, mobility, and video services. Particularly, MRV’s OptiDriver platform provides adaptable, efficient support for high-capacity business and data center connectivity and has attracted quite a lot of attention lately, with its customers increasing to 59 as stated by the company’s first quarter financial report. Additionally, the OptiDriver platform has been gaining traction lately by attracting a new client under its wings. On June 23, MRV Communication announced that T-Mobile Czech Republic, which is one of the largest package delivery companies in the world and a leading global provider of specialized transportation and logistics services, is adopting MRV’s OptiDriver and Pro-Vision platforms to deliver 100G high-capacity bandwidth for interconnect services to the corporate headquarters, data center and branch locations of this firm. This clearly indicates that MRV’s platforms and its innovative and optical solutions are trustworthy, while a number of worldwide companies heavily rely on MRV’s expertise in running their daily operations. Even more to that, the OptiDriver optical transport platform has been recognized for innovation, as it was named the 2015 SDN Excellence Award winner, presented by INTERNET TELEPHONY magazine and SDN Zone.
