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Actuate Corporation (BIRT): Insiders Aren’t Crazy About It But Hedge Funds Love It

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Is it smart to be bullish on Actuate Corporation (NASDAQ:BIRT)?

If you were to ask many market players, hedge funds are viewed as delayed, outdated financial vehicles of an era lost to time. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey focuses on the crème de la crème of this group, close to 525 funds. Analysts calculate that this group oversees most of the smart money’s total assets, and by monitoring their best picks, we’ve found a few investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as useful, bullish insider trading sentiment is another way to look at the stock market universe. Obviously, there are many stimuli for an executive to get rid of shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the valuable potential of this strategy if investors know where to look (learn more here).

Keeping this in mind, we’re going to analyze the recent info surrounding Actuate Corporation (NASDAQ:BIRT).

What does the smart money think about Actuate Corporation (NASDAQ:BIRT)?

In preparation for the third quarter, a total of 13 of the hedge funds we track held long positions in this stock, a change of 18% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully.

Actuate Corporation (NASDAQ:BIRT)According to our 13F database, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Actuate Corporation (NASDAQ:BIRT). Renaissance Technologies has a $10.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $10.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include George Soros’s Soros Fund Management, Cliff Asness’s AQR Capital Management and Glenn Russell Dubin’s Highbridge Capital Management.

As one would understandably expect, particular hedge funds have jumped into Actuate Corporation (NASDAQ:BIRT) headfirst. Renaissance Technologies, managed by Jim Simons, created the most valuable position in Actuate Corporation (NASDAQ:BIRT). Renaissance Technologies had 10.8 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also initiated a $10.3 million position during the quarter. The other funds with brand new BIRT positions are George Soros’s Soros Fund Management, Cliff Asness’s AQR Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.

How are insiders trading Actuate Corporation (NASDAQ:BIRT)?

Legal insider trading, particularly when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past six months. Over the last half-year time period, Actuate Corporation (NASDAQ:BIRT) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Actuate Corporation (NASDAQ:BIRT). These stocks are Active Network Inc (NYSE:ACTV), Vringo, Inc. (NYSEAMEX:VRNG), DTS Inc. (NASDAQ:DTSI), RealNetworks Inc (NASDAQ:RNWK), and Guidance Software, Inc. (NASDAQ:GUID). All of these stocks are in the application software industry and their market caps are similar to BIRT’s market cap.

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