SeaChange International, Inc. (SEAC) Fell Out Of Favor With Hedge Funds
In this article we are going to use hedge fund sentiment as a tool and determine whether SeaChange International, Inc. (NASDAQ:SEAC) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
SeaChange International, Inc. (NASDAQ:SEAC) has seen a decrease in support from the world's most elite money managers lately. SeaChange International, Inc. (NASDAQ:SEAC) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 14. There were 6 hedge funds in our database with SEAC holdings at the end of December. Our calculations also showed that SEAC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Michael Gelband of ExodusPoint Capital
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Do Hedge Funds Think SEAC Is A Good Stock To Buy Now?
At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -50% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SEAC over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of SeaChange International, Inc. (NASDAQ:SEAC), with a stake worth $0.1 million reported as of the end of March. Trailing Citadel Investment Group was Two Sigma Advisors, which amassed a stake valued at $0.1 million. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to SeaChange International, Inc. (NASDAQ:SEAC), around 0.0003% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.0002 percent of its 13F equity portfolio to SEAC.
Seeing as SeaChange International, Inc. (NASDAQ:SEAC) has witnessed bearish sentiment from hedge fund managers, we can see that there were a few hedge funds who were dropping their full holdings in the first quarter. At the top of the heap, Jim Roumell's Roumell Asset Management sold off the largest stake of all the hedgies followed by Insider Monkey, valued at an estimated $0.8 million in stock. Renaissance Technologies, also said goodbye to its stock, about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds in the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as SeaChange International, Inc. (NASDAQ:SEAC) but similarly valued. We will take a look at Unique Fabricating Inc (NYSE:UFAB), First US Bancshares, Inc. (NASDAQ:FUSB), Navidea Biopharmaceuticals Inc (NYSE:NAVB), Puhui Wealth Investment Management Co., Ltd. (NASDAQ:PHCF), Motus GI Holdings, Inc. (NASDAQ:MOTS), Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC), and Hallador Energy Co (NASDAQ:HNRG). This group of stocks' market values match SEAC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UFAB,3,5446,1 FUSB,2,4095,0 NAVB,3,634,0 PHCF,2,252,2 MOTS,6,3178,0 CYCC,8,16256,4 HNRG,4,4536,-1 Average,4,4914,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $0 million in SEAC's case. Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC) is the most popular stock in this table. On the other hand First US Bancshares, Inc. (NASDAQ:FUSB) is the least popular one with only 2 bullish hedge fund positions. SeaChange International, Inc. (NASDAQ:SEAC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SEAC is 16.8. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately SEAC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SEAC investors were disappointed as the stock returned -26.5% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
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