Splunk Inc (NASDAQ:SPLK) has experienced an increase in support from the world's most elite money managers in recent months.
According to most investors, hedge funds are seen as worthless, old investment tools of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey look at the bigwigs of this club, about 450 funds. It is widely believed that this group controls the lion's share of the smart money's total capital, and by watching their best equity investments, we have unsheathed a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 outpaced the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Just as integral, optimistic insider trading activity is a second way to break down the financial markets. There are a variety of reasons for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this method if piggybackers know what to do (learn more here).
With these "truths" under our belt, we're going to take a glance at the recent action surrounding Splunk Inc (NASDAQ:SPLK).
At the end of the fourth quarter, a total of 22 of the hedge funds we track held long positions in this stock, a change of 22% from the previous quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly.
According to our comprehensive database, Criterion Capital, managed by Christopher Lord, holds the most valuable position in Splunk Inc (NASDAQ:SPLK). Criterion Capital has a $44 million position in the stock, comprising 2.4% of its 13F portfolio. On Criterion Capital's heels is Ken Griffin of Citadel Investment Group, with a $31 million position; the fund has 0% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Steven Cohen's SAC Capital Advisors, Jim Simons's Renaissance Technologies and Donald Chiboucis's Columbus Circle Investors.
As one would reasonably expect, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in Splunk Inc (NASDAQ:SPLK). Citadel Investment Group had 31 million invested in the company at the end of the quarter. Steven Cohen's SAC Capital Advisors also made a $22 million investment in the stock during the quarter. The other funds with brand new SPLK positions are Jim Simons's Renaissance Technologies, George Soros's Soros Fund Management, and SAC Subsidiary's CR Intrinsic Investors.
Insider buying is most useful when the company we're looking at has experienced transactions within the past six months. Over the latest half-year time frame, Splunk Inc (NASDAQ:SPLK) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
With the results exhibited by the aforementioned studies, retail investors must always watch hedge fund and insider trading activity, and Splunk Inc (NASDAQ:SPLK) applies perfectly to this mantra.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.