Is Cardionet Inc (NASDAQ:BEAT) a superb investment right now? Prominent investors are taking an optimistic view. The number of long hedge fund positions increased by 1 in recent months.
In the eyes of most traders, hedge funds are viewed as worthless, old investment tools of yesteryear. While there are more than 8000 funds trading at the moment, we at Insider Monkey hone in on the elite of this club, around 450 funds. Most estimates calculate that this group controls the lion's share of the hedge fund industry's total asset base, and by monitoring their top picks, we have brought to light a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as key, bullish insider trading sentiment is another way to break down the financial markets. There are a number of incentives for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this method if investors know where to look (learn more here).
Keeping this in mind, it's important to take a glance at the recent action surrounding Cardionet Inc (NASDAQ:BEAT).
At Q1's end, a total of 10 of the hedge funds we track were long in this stock, a change of 11% from the first quarter. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, Douglas T. Granat's Trigran Investments had the largest position in Cardionet Inc (NASDAQ:BEAT), worth close to $6 million, comprising 3.1% of its total 13F portfolio. On Trigran Investments's heels is Stephen DuBois of Camber Capital Management, with a $6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Nathan Fischel's DAFNA Capital Management, Jim Simons's Renaissance Technologies and J. Carlo Cannell's Cannell Capital.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Cannell Capital, managed by J. Carlo Cannell, initiated the largest position in Cardionet Inc (NASDAQ:BEAT). Cannell Capital had 0.7 million invested in the company at the end of the quarter. Peter S. Park's Park West Asset Management also initiated a $0.6 million position during the quarter. The only other fund with a brand new BEAT position is Ken Griffin's Citadel Investment Group.
Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past six months. Over the latest 180-day time period, Cardionet Inc (NASDAQ:BEAT) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results shown by our research, retail investors must always pay attention to hedge fund and insider trading sentiment, and Cardionet Inc (NASDAQ:BEAT) is an important part of this process.