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Actuate Corporation (BIRT), Guidance Software, Inc. (GUID): Hedge Funds Are Buying Active Network Inc (ACTV)

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Active Network Inc (NYSE:ACTV) has seen an increase in hedge fund interest recently.

Active Network Inc (NYSE:ACTV)To most traders, hedge funds are viewed as underperforming, old investment tools of the past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey hone in on the masters of this group, close to 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total asset base, and by watching their best picks, we have deciphered a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Just as beneficial, bullish insider trading activity is a second way to parse down the stock market universe. There are a variety of motivations for an insider to sell shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this tactic if “monkeys” understand where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the recent action regarding Active Network Inc (NYSE:ACTV).

Hedge fund activity in Active Network Inc (NYSE:ACTV)

Heading into 2013, a total of 11 of the hedge funds we track were bullish in this stock, a change of 10% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly.

According to our comprehensive database, Chuck Royce’s Royce & Associates had the largest position in Active Network Inc (NYSE:ACTV), worth close to $9 million, accounting for 0% of its total 13F portfolio. On Royce & Associates’s heels is Millennium Management, managed by Israel Englander, which held a $3 million position; 3.2% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Lisa Rapuano’s Lane Five Capital, Ken Griffin’s Citadel Investment Group and Phil Frohlich’s Prescott Group Capital Management.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Lane Five Capital, managed by Lisa Rapuano, created the largest position in Active Network Inc (NYSE:ACTV). Lane Five Capital had 3 million invested in the company at the end of the quarter. Phil Frohlich’s Prescott Group Capital Management also made a $2 million investment in the stock during the quarter. The only other fund with a new position in the stock is John Overdeck and David Siegel’s Two Sigma Advisors.

What have insiders been doing with Active Network Inc (NYSE:ACTV)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past half-year. Over the latest half-year time frame, Active Network Inc (NYSE:ACTV) has seen 3 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Active Network Inc (NYSE:ACTV). These stocks are Actuate Corporation (NASDAQ:BIRT), Guidance Software, Inc. (NASDAQ:GUID), RealNetworks Inc (NASDAQ:RNWK), Market Leader Inc (NASDAQ:LEDR), and Vringo, Inc. (NYSEAMEX:VRNG). This group of stocks are the members of the application software industry and their market caps are closest to ACTV’s market cap.

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