Is MicroStrategy Incorporated (NASDAQ:MSTR) ready to raly soon? The best stock pickers are becoming less confident. The number of bullish hedge fund positions were cut by 3 recently.
At the moment, there are dozens of methods shareholders can use to analyze Mr. Market. Some of the most underrated are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite investment managers can outperform the broader indices by a very impressive margin (see just how much).
Just as key, bullish insider trading sentiment is a second way to break down the stock market universe. There are a number of reasons for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if investors know what to do (learn more here).
With these “truths” under our belt, it’s important to take a look at the latest action regarding MicroStrategy Incorporated (NASDAQ:MSTR).
How have hedgies been trading MicroStrategy Incorporated (NASDAQ:MSTR)?
At the end of the fourth quarter, a total of 13 of the hedge funds we track held long positions in this stock, a change of -19% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly.
According to our comprehensive database, Eminence Capital, managed by Ricky Sandler, holds the most valuable position in MicroStrategy Incorporated (NASDAQ:MSTR). Eminence Capital has a $79 million position in the stock, comprising 2.3% of its 13F portfolio. On Eminence Capital’s heels is SAC Capital Advisors, managed by Steven Cohen, which held a $18 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Curtis Schenker and Craig Effron’s Scoggin, Ken Griffin’s Citadel Investment Group and Jim Simons’s Renaissance Technologies.
Because MicroStrategy Incorporated (NASDAQ:MSTR) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds that elected to cut their full holdings in Q4. At the top of the heap, Scott Fine and Peter Richards’s Empire Capital Management sold off the biggest stake of all the hedgies we key on, worth close to $27 million in call options. Scott Fine and Peter Richards’s fund, Empire Capital Management, also said goodbye to its stock, about $21 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds in Q4.
What do corporate executives and insiders think about MicroStrategy Incorporated (NASDAQ:MSTR)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has seen transactions within the past six months. Over the last half-year time period, MicroStrategy Incorporated (NASDAQ:MSTR) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to MicroStrategy Incorporated (NASDAQ:MSTR). These stocks are Interactive Intelligence Group Inc (NASDAQ:ININ), Blackbaud, Inc. (NASDAQ:BLKB), NetScout Systems, Inc. (NASDAQ:NTCT), Pegasystems Inc. (NASDAQ:PEGA), and Bottomline Technologies (NASDAQ:EPAY). All of these stocks are in the business software & services industry and their market caps are closest to MSTR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Interactive Intelligence Group Inc (NASDAQ:ININ) | 3 | 1 | 8 |
| Blackbaud, Inc. (NASDAQ:BLKB) | 6 | 0 | 5 |
| NetScout Systems, Inc. (NASDAQ:NTCT) | 15 | 0 | 2 |
| Pegasystems Inc. (NASDAQ:PEGA) | 6 | 0 | 5 |
| Bottomline Technologies (NASDAQ:EPAY) | 8 | 0 | 7 |
With the results demonstrated by the aforementioned strategies, retail investors should always monitor hedge fund and insider trading activity, and MicroStrategy Incorporated (NASDAQ:MSTR) shareholders fit into this picture quite nicely.
