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Is iSoftStone Holdings Ltd (ADR) (ISS) Going to Burn These Hedge Funds?

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iSoftStone Holdings Ltd (ADR) (NYSE:ISS) was in 5 hedge funds’ portfolio at the end of the first quarter of 2013. ISS investors should be aware of a decrease in enthusiasm from smart money recently. There were 5 hedge funds in our database with ISS holdings at the end of the previous quarter.

In the eyes of most stock holders, hedge funds are viewed as slow, old financial tools of years past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey look at the leaders of this club, close to 450 funds. It is estimated that this group controls most of the smart money’s total asset base, and by watching their highest performing stock picks, we have identified a number of investment strategies that have historically outstripped the S&P 500 index. 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 began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, bullish insider trading activity is another way to break down the world of equities. As the old adage goes: there are lots of stimuli for a bullish insider to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).

With these “truths” under our belt, let’s take a look at the latest action encompassing iSoftStone Holdings Ltd (ADR) (NYSE:ISS).

How have hedgies been trading iSoftStone Holdings Ltd (ADR) (NYSE:ISS)?

In preparation for this quarter, a total of 5 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably.

iSoftStone Holdings Ltd (ADR) (NYSE:ISS)According to our comprehensive database, Stephen Mandel’s Lone Pine Capital had the most valuable position in iSoftStone Holdings Ltd (ADR) (NYSE:ISS), worth close to $25.7 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Altai Capital, managed by Rishi Bajaj, Toby Symonds, and Steve Tesoriere, which held a $3.1 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include D. E. Shaw’s D E Shaw, Philip Hempleman’s Ardsley Partners and Jim Simons’s Renaissance Technologies.

Due to the fact that iSoftStone Holdings Ltd (ADR) (NYSE:ISS) has witnessed a declination in interest from the aggregate hedge fund industry, we can see that there exists a select few money managers that decided to sell off their entire stakes in Q1. Interestingly, Richard Chilton’s Chilton Investment Company cut the largest investment of the 450+ funds we watch, valued at close to $0.3 million in stock. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in iSoftStone Holdings Ltd (ADR) (NYSE:ISS)

Bullish insider trading is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time frame, iSoftStone Holdings Ltd (ADR) (NYSE:ISS) has seen zero 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 iSoftStone Holdings Ltd (ADR) (NYSE:ISS). These stocks are Digimarc Corp (NASDAQ:DMRC), Greenway Medical Technologies, Inc. (NYSE:GWAY), Computer Task Group, Inc. (NASDAQ:CTGX), Boingo Wireless Inc (NASDAQ:WIFI), and CIBER, Inc. (NYSE:CBR). This group of stocks are in the information technology services industry and their market caps resemble ISS’s market cap.

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