Take-Two Interactive Software, Inc. (NASDAQ:TTWO): Are Hedge Funds Right About This Stock?

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has seen a decrease in enthusiasm from smart money lately.

Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

According to most market participants, hedge funds are perceived as worthless, old investment vehicles of years past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey look at the top tier of this group, close to 450 funds. It is widely believed that this group oversees the lion’s share of the smart money’s total capital, and by keeping an eye on their highest performing picks, we have unearthed a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed 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 25 percentage points in 6.5 month (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is another way to parse down the marketplace. There are many incentives for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).

With all of this in mind, we’re going to take a peek at the latest action regarding Take-Two Interactive Software, Inc. (NASDAQ:TTWO).

How have hedgies been trading Take-Two Interactive Software, Inc. (NASDAQ:TTWO)?

At the end of the fourth quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of -21% from the third quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly.

When looking at the hedgies we track, Carl Icahn’s Icahn Capital LP had the largest position in Take-Two Interactive Software, Inc. (NASDAQ:TTWO), worth close to $132 million, accounting for 1% of its total 13F portfolio. Sitting at the No. 2 spot is Larry Robbins of Glenview Capital, with a $71 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Michael Lowenstein’s Kensico Capital and David Gallo’s Valinor Management LLC.

Seeing as Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedge funds that slashed their positions entirely in Q4. At the top of the heap, Richard Schimel’s Diamondback Capital said goodbye to the largest investment of the “upper crust” of funds we watch, totaling about $19 million in stock.. Ryan Frick and Oliver Evans’s fund, Dorsal Capital Management, also dumped its stock, about $10 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds in Q4.

Insider trading activity in Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time period, Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has experienced 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

With the returns demonstrated by the aforementioned research, everyday investors must always monitor hedge fund and insider trading sentiment, and Take-Two Interactive Software, Inc. (NASDAQ:TTWO) applies perfectly to this mantra.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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