Is Compuware Corporation (NASDAQ:CPWR) a healthy stock for your portfolio? Prominent investors are turning less bullish. The number of long hedge fund positions were trimmed by 3 in recent months.
To the average investor, there are a multitude of gauges investors can use to analyze their holdings. Two of the most useful are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a superb margin (see just how much).
Just as beneficial, positive insider trading sentiment is another way to parse down the world of equities. As the old adage goes: there are many motivations for an insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).
Now, it’s important to take a look at the key action surrounding Compuware Corporation (NASDAQ:CPWR).
What have hedge funds been doing with Compuware Corporation (NASDAQ:CPWR)?
In preparation for this year, a total of 19 of the hedge funds we track held long positions in this stock, a change of -14% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly.
According to our comprehensive database, Paul Singer’s Elliott Management had the most valuable position in Compuware Corporation (NASDAQ:CPWR), worth close to $131 million, accounting for 4% of its total 13F portfolio. On Elliott Management’s heels is Jeffrey Smith of Starboard Value LP, with a $76 million position; 0.8% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Jonathon Jacobson’s Highfields Capital Management, Tom Sandell’s Sandell Asset Management and John Osterweis’s Osterweis Capital Management.
Seeing as Compuware Corporation (NASDAQ:CPWR) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds who sold off their full holdings heading into 2013. At the top of the heap, Michael Kaufman’s MAK Capital One dumped the largest investment of all the hedgies we track, valued at close to $42 million in stock., and Anand Parekh of Alyeska Investment Group was right behind this move, as the fund said goodbye to about $13 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds heading into 2013.
Insider trading activity in Compuware Corporation (NASDAQ:CPWR)
Bullish insider trading is best served when the company we’re looking at has seen transactions within the past six months. Over the last half-year time period, Compuware Corporation (NASDAQ:CPWR) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the returns exhibited by our tactics, everyday investors must always pay attention to hedge fund and insider trading activity, and Compuware Corporation (NASDAQ:CPWR) is no exception.
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.