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This Metric Says You Are Smart to Buy Zynga Inc (NASDAQ:ZNGA)

Zynga Inc (NASDAQ:ZNGA) was in 16 hedge funds’ portfolio at the end of December. ZNGA shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 14 hedge funds in our database with ZNGA holdings at the end of the previous quarter.

If you’d ask most market participants, hedge funds are assumed to be unimportant, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at present, we look at the elite of this club, about 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by tracking their best picks, we have formulated a few investment strategies that have historically outpaced 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 topped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).


Equally as important, positive insider trading sentiment is another way to break down the investments you’re interested in. Obviously, there are plenty of stimuli for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would buy. Several empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

With all of this in mind, let’s take a peek at the latest action regarding Zynga Inc (NASDAQ:ZNGA).

Hedge fund activity in Zynga Inc (NASDAQ:ZNGA)

Heading into 2013, a total of 16 of the hedge funds we track were bullish in this stock, a change of 14% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Tiger Consumer Management, managed by Patrick McCormack, holds the largest position in Zynga Inc (NASDAQ:ZNGA). Tiger Consumer Management has a $10 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $10 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include D. E. Shaw’s D E Shaw, Paul Tudor Jones’s Tudor Investment Corp and Tony Chedraoui’s Tyrus Capital.

Now, specific money managers have been driving this bullishness. Tiger Consumer Management, managed by Patrick McCormack, assembled the most outsized position in Zynga Inc (NASDAQ:ZNGA). Tiger Consumer Management had 10 million invested in the company at the end of the quarter. Tony Chedraoui’s Tyrus Capital also made a $5 million investment in the stock during the quarter. The other funds with brand new ZNGA positions are Israel Englander’s Millennium Management, and Dmitry Balyasny’s Balyasny Asset Management.

How have insiders been trading Zynga Inc (NASDAQ:ZNGA)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last half-year time period, Zynga Inc (NASDAQ:ZNGA) has seen 1 unique insiders buying, and 9 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Zynga Inc (NASDAQ:ZNGA) is an important part of this process.

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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