To many of your fellow readers, hedge funds are assumed to be delayed, old investment tools of an era lost to time. Although there are over 8,000 hedge funds in operation in present day, this site focuses on the upper echelon of this group, close to 525 funds. Analysts calculate that this group has its hands on the majority of the smart money's total assets, and by watching their best stock picks, we've formulated a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as key, bullish insider trading activity is a second way to look at the world of equities. As the old adage goes: there are lots of incentives for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this tactic if shareholders know where to look (learn more here).
Thus, let's study the newest info about BMC Software, Inc. (NASDAQ:BMC).
In preparation for the third quarter, a total of 40 of the hedge funds we track held long positions in this stock, a change of 14% from one quarter earlier. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially.
When using filings from the hedgies we track, Paul Singer's Elliott Management had the biggest position in BMC Software, Inc. (NASDAQ:BMC), worth close to $618.2 million, comprising 11.9% of its total 13F portfolio. Coming in second is D. E. Shaw of D E Shaw, with a $264.4 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Matthew Halbower's Pentwater Capital Management, Andrew J. M. Spokes's Farallon Capital and Robert Emil Zoellner's Alpine Associates.
Consequently, specific money managers were breaking ground themselves. Elliott Management, managed by Paul Singer, assembled the largest position in BMC Software, Inc. (NASDAQ:BMC). Elliott Management had 618.2 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $264.4 million investment in the stock during the quarter. The other funds with brand new BMC positions are Matthew Halbower's Pentwater Capital Management, Andrew J. M. Spokes's Farallon Capital, and Robert Emil Zoellner's Alpine Associates.
Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last six-month time period, BMC Software, Inc. (NASDAQ:BMC) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to BMC Software, Inc. (NASDAQ:BMC). These stocks are Workday Inc (NYSE:WDAY), SolarWinds Inc (NYSE:SWI), Red Hat, Inc. (NYSE:RHT), F5 Networks, Inc. (NASDAQ:FFIV), and Nuance Communications Inc. (NASDAQ:NUAN). This group of stocks belong to the application software industry and their market caps are closest to BMC's market cap.