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Is EPIQ Systems, Inc. (EPIQ) Going to Burn These Hedge Funds?

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EPIQ Systems, Inc. (NASDAQ:EPIQ) was in 9 hedge funds’ portfolio at the end of March. EPIQ has seen an increase in enthusiasm from smart money recently. There were 5 hedge funds in our database with EPIQ positions at the end of the previous quarter.

According to most stock holders, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are over 8000 funds in operation at present, we choose to focus on the moguls of this club, close to 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total asset base, and by paying attention to their highest performing equity investments, we have unsheathed a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as beneficial, bullish insider trading activity is another way to parse down the world of equities. There are many incentives for an insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this tactic if investors know what to do (learn more here).

Now, we’re going to take a glance at the latest action regarding EPIQ Systems, Inc. (NASDAQ:EPIQ).

How have hedgies been trading EPIQ Systems, Inc. (NASDAQ:EPIQ)?

At the end of the first quarter, a total of 9 of the hedge funds we track held long positions in this stock, a change of 80% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably.

EPIQ Systems, Inc. (NASDAQ:EPIQ)Of the funds we track, P2 Capital Partners, managed by Claus Moller, holds the largest position in EPIQ Systems, Inc. (NASDAQ:EPIQ). P2 Capital Partners has a $22.9 million position in the stock, comprising 3.9% of its 13F portfolio. On P2 Capital Partners’s heels is Dreman Value Management, managed by David Dreman, which held a $3.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Dreman Value Management, managed by David Dreman, initiated the most outsized position in EPIQ Systems, Inc. (NASDAQ:EPIQ). Dreman Value Management had 3.3 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management and Neil Chriss’s Hutchin Hill Capital.

How have insiders been trading EPIQ Systems, Inc. (NASDAQ:EPIQ)?

Bullish insider trading is most useful when the company in question has experienced transactions within the past 180 days. Over the last 180-day time period, EPIQ Systems, Inc. (NASDAQ:EPIQ) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to EPIQ Systems, Inc. (NASDAQ:EPIQ). These stocks are Sykes Enterprises, Incorporated (NASDAQ:SYKE), Computer Task Group, Inc. (NASDAQ:CTGX), Virtusa Corporation (NASDAQ:VRTU), 21Vianet Group Inc (NASDAQ:VNET), and Greenway Medical Technologies, Inc. (NYSE:GWAY). This group of stocks are in the information technology services industry and their market caps are similar to EPIQ’s market cap.

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