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Should You Avoid BroadSoft Inc (BSFT)?

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If you were to ask many of your peers, hedge funds are viewed as delayed, old financial vehicles of an era lost to time. Although there are In excess of 8,000 hedge funds in operation currently, Insider Monkey focuses on the leaders of this club, about 525 funds. It is assumed that this group oversees most of all hedge funds’ total capital, and by tracking their highest quality investments, we’ve figured out a few investment strategies that have historically outstripped the broader indices. 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 outclassed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

BroadSoft Inc (NASDAQ:BSFT)

Just as crucial, bullish insider trading activity is another way to analyze the world of equities. There are many incentives for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this method if investors know what to do (learn more here).

Keeping this in mind, it’s important to discuss the newest info surrounding BroadSoft Inc (NASDAQ:BSFT).

How have hedgies been trading BroadSoft Inc (NASDAQ:BSFT)?

At the end of the second quarter, a total of 9 of the hedge funds we track were bullish in this stock, a change of -25% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully.

According to our 13F database, Ken Griffin’s Citadel Investment Group had the largest position in BroadSoft Inc (NASDAQ:BSFT), worth close to $15.7 million, accounting for less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Lee Hobson of Highside Capital Management, with a $10 million position; 2% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Scott Fine and Peter Richards’s Empire Capital Management, Christopher Zepf and Brian Thonn’s Kingdom Ridge Capital and Scott Fine and Peter Richards’s Empire Capital Management.

Due to the fact BroadSoft Inc (NASDAQ:BSFT) has faced dropping sentiment from upper-tier hedge fund managers, it’s easy to see that there exists a select few hedgies that elected to cut their entire stakes last quarter. Interestingly, Mark Kingdon’s Kingdon Capital said goodbye to the biggest stake of the “upper crust” of funds we key on, comprising an estimated $5.3 million in stock. John Murphy’s fund, Alydar Capital, also dropped its stock, about $5.3 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds last quarter.

How are insiders trading BroadSoft Inc (NASDAQ:BSFT)?

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, BroadSoft Inc (NASDAQ:BSFT) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to BroadSoft Inc (NASDAQ:BSFT). These stocks are FleetMatics Group PLC (NYSE:FLTX), Lifelock Inc (NYSE:LOCK), Demandware Inc (NYSE:DWRE), AVG Technologies NV (NYSE:AVG), and PROS Holdings, Inc. (NYSE:PRO). All of these stocks are in the application software industry and their market caps are similar to BSFT’s market cap.

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