At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not SeaChange International (NASDAQ:SEAC) makes for a good investment right now.
Is SEAC a good stock to buy now? SeaChange International (NASDAQ:SEAC) has experienced a decrease in support from the world's most elite money managers of late. SeaChange International (NASDAQ:SEAC) was in 8 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. Our calculations also showed that SEAC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are several metrics investors employ to evaluate publicly traded companies. Two of the most useful metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top fund managers can trounce the broader indices by a healthy amount (see the details here).
Matthew Hulsizer PEAK6 Capital
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to take a peek at the new hedge fund action regarding SeaChange International (NASDAQ:SEAC).
What have hedge funds been doing with SeaChange International (NASDAQ:SEAC)?
Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SEAC over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is SEAC A Good Stock To Buy?
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the number one position in SeaChange International (NASDAQ:SEAC). Two Sigma Advisors has a $0.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Matthew Hulsizer of PEAK6 Capital Management, with a $0.2 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish comprise Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Chuck Royce's Royce & Associates. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to SeaChange International (NASDAQ:SEAC), around 0.01% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, designating 0.0024 percent of its 13F equity portfolio to SEAC.
Seeing as SeaChange International (NASDAQ:SEAC) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who were dropping their positions entirely by the end of the third quarter. Interestingly, Jim Roumell's Roumell Asset Management said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $1.3 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund dumped about $0.1 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as SeaChange International (NASDAQ:SEAC) but similarly valued. We will take a look at Aehr Test Systems (NASDAQ:AEHR), aTyr Pharma Inc. (NASDAQ:LIFE), Amplify Energy Corp. (NYSE:AMPY), Monaker Group, Inc. (NASDAQ:MKGI), Superior Industries International Inc. (NYSE:SUP), Opiant Pharmaceuticals, Inc. (NASDAQ:OPNT), and Unico American Corporation (NASDAQ:UNAM). All of these stocks' market caps are similar to SEAC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AEHR,3,1867,1 LIFE,6,6329,1 AMPY,12,12882,-6 MKGI,2,854,1 SUP,12,5105,-1 OPNT,3,2650,-1 UNAM,1,136,0 Average,5.6,4260,-0.7 [/table]
As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $1 million in SEAC's case. Amplify Energy Corp. (NYSE:AMPY) is the most popular stock in this table. On the other hand Unico American Corporation (NASDAQ:UNAM) is the least popular one with only 1 bullish hedge fund positions. SeaChange International (NASDAQ:SEAC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SEAC is 51. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately SEAC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SEAC were disappointed as the stock returned 4.6% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
