NIC Inc. (NASDAQ:EGOV) was in 8 hedge funds’ portfolio at the end of the fourth quarter of 2012. EGOV has seen an increase in activity from the world’s largest hedge funds in recent months. There were 6 hedge funds in our database with EGOV holdings at the end of the previous quarter.
To most shareholders, hedge funds are perceived as underperforming, old financial vehicles of the past. While there are more than 8000 funds trading at present, we hone in on the elite of this group, around 450 funds. It is widely believed that this group has its hands on most of the smart money’s total capital, and by monitoring their best stock picks, we have discovered a number of investment strategies that have historically outstripped 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 beaten the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as integral, positive insider trading activity is another way to parse down the financial markets. There are many reasons for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the valuable potential of this strategy if piggybackers understand what to do (learn more here).
Consequently, we’re going to take a look at the latest action encompassing NIC Inc. (NASDAQ:EGOV).
What have hedge funds been doing with NIC Inc. (NASDAQ:EGOV)?
Heading into 2013, a total of 8 of the hedge funds we track held long positions in this stock, a change of 33% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully.
According to our comprehensive database, Robert B. Gillam’s McKinley Capital Management had the largest position in NIC Inc. (NASDAQ:EGOV), worth close to $5.6 million, accounting for 0.3% of its total 13F portfolio. On McKinley Capital Management’s heels is Renaissance Technologies, managed by Jim Simons, which held a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include D. E. Shaw’s D E Shaw, Donald Chiboucis’s Columbus Circle Investors and Israel Englander’s Millennium Management.
As industrywide interest jumped, some big names were leading the bulls’ herd. Columbus Circle Investors, managed by Donald Chiboucis, assembled the biggest position in NIC Inc. (NASDAQ:EGOV). Columbus Circle Investors had 1.4 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $0.7 million position during the quarter. The only other fund with a brand new EGOV position is Ken Griffin’s Citadel Investment Group.
Insider trading activity in NIC Inc. (NASDAQ:EGOV)
Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last 180-day time period, NIC Inc. (NASDAQ:EGOV) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to NIC Inc. (NASDAQ:EGOV). These stocks are Jive Software Inc (NASDAQ:JIVE), Manhattan Associates, Inc. (NASDAQ:MANH), Advent Software, Inc. (NASDAQ:ADVS), Progress Software Corporation (NASDAQ:PRGS), and Synchronoss Technologies, Inc. (NASDAQ:SNCR). This group of stocks belong to the application software industry and their market caps are similar to EGOV’s market cap.