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This Metric Says You Are Smart to Buy OpenTable Inc (NASDAQ:OPEN)

OpenTable Inc (NASDAQ:OPEN) was in 17 hedge funds’ portfolio at the end of the fourth quarter of 2012. OPEN has seen an increase in enthusiasm from smart money in recent months. There were 15 hedge funds in our database with OPEN positions at the end of the previous quarter.

OpenTable Inc

To most market participants, hedge funds are viewed as worthless, old investment tools of years past. While there are over 8000 funds in operation at the moment, we hone in on the bigwigs of this group, about 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total capital, and by tracking their best stock picks, we have found a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Equally as key, positive insider trading sentiment is a second way to break down the marketplace. There are a variety of stimuli for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this method if shareholders know where to look (learn more here).

Now, it’s important to take a gander at the recent action surrounding OpenTable Inc (NASDAQ:OPEN).

How are hedge funds trading OpenTable Inc (NASDAQ:OPEN)?

Heading into 2013, a total of 17 of the hedge funds we track were bullish in this stock, a change of 13% from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Cantillon Capital Management, managed by William von Mueffling, holds the most valuable position in OpenTable Inc (NASDAQ:OPEN). Cantillon Capital Management has a $52 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Valiant Capital, managed by Christopher R. Hansen, which held a $51 million position; the fund has 5.1% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Steven Cohen’s SAC Capital Advisors, Robert Pitts’s Steadfast Capital Management and D. E. Shaw’s D E Shaw.

As aggregate interest increased, key money managers were leading the bulls’ herd. Cantillon Capital Management, managed by William von Mueffling, initiated the biggest position in OpenTable Inc (NASDAQ:OPEN). Cantillon Capital Management had 52 million invested in the company at the end of the quarter. John Thaler’s JAT Capital Management also initiated a $9 million position during the quarter. The following funds were also among the new OPEN investors: SAC Subsidiary’s Sigma Capital Management, SAC Subsidiary’s CR Intrinsic Investors, and Eric Semler’s TCS Capital Management.

What have insiders been doing with OpenTable Inc (NASDAQ:OPEN)?

Bullish insider trading is best served when the company in question has experienced transactions within the past 180 days. Over the last six-month time frame, OpenTable Inc (NASDAQ:OPEN) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

With the results exhibited by our research, everyday investors should always watch hedge fund and insider trading activity, and OpenTable Inc (NASDAQ:OPEN) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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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