Saba Software, Inc. (NASDAQ:SABA) investors should be aware of an increase in hedge fund interest in recent months.
To most market participants, hedge funds are assumed to be underperforming, old financial tools of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey look at the aristocrats of this club, around 450 funds. Most estimates calculate that this group controls the majority of all hedge funds' total asset base, and by monitoring their best investments, we have uncovered a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 (see the details here).
Just as beneficial, positive insider trading activity is a second way to parse down the stock market universe. There are a variety of reasons for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this tactic if investors understand what to do (learn more here).
Consequently, we're going to take a gander at the recent action surrounding Saba Software, Inc. (NASDAQ:SABA).
At Q1's end, a total of 12 of the hedge funds we track were bullish in this stock, a change of 33% from the previous quarter. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, Park West Asset Management, managed by Peter S. Park, holds the biggest position in Saba Software, Inc. (NASDAQ:SABA). Park West Asset Management has a $18.1 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Philip Hempleman of Ardsley Partners, with a $16.3 million position; 2.3% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Israel Englander's Millennium Management, David Moradi's Anthion Management and Peter A. Wright's P.A.W. CAPITAL PARTNERS.
As one would reasonably expect, key hedge funds have been driving this bullishness. Anthion Management, managed by David Moradi, assembled the most outsized position in Saba Software, Inc. (NASDAQ:SABA). Anthion Management had 2.6 million invested in the company at the end of the quarter. John Fichthorn's Dialectic Capital Management also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel's Two Sigma Advisors, Jim Simons's Renaissance Technologies, and Matthew Hulsizer's PEAK6 Capital Management.
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 last 180-day time period, Saba Software, Inc. (NASDAQ:SABA) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the results exhibited by our strategies, retail investors should always watch hedge fund and insider trading activity, and Saba Software, Inc. (NASDAQ:SABA) is an important part of this process.