To many market players, hedge funds are assumed to be delayed, old investment tools of an era lost to time. Although there are more than 8,000 hedge funds trading today, Insider Monkey aim at the masters of this group, about 525 funds. Analysts calculate that this group controls the majority of the hedge fund industry's total assets, and by paying attention to their highest performing equity investments, we've unsheathed a few investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Equally as crucial, positive insider trading sentiment is a second way to analyze the investments you're interested in. There are lots of motivations for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this strategy if piggybackers know where to look (learn more here).
Furthermore, we're going to study the recent info for Avid Technology, Inc. (NASDAQ:AVID).
At Q2's end, a total of 10 of the hedge funds we track held long positions in this stock, a change of -9% from one quarter earlier. With hedgies' capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully.
According to our 13F database, Richard Blum's Blum Capital Partners had the biggest position in Avid Technology, Inc. (NASDAQ:AVID), worth close to $41.9 million, comprising 6.8% of its total 13F portfolio. Coming in second is Central Square Management, managed by Kelly Cardwell, which held a $8.9 million position; 7.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Gregg J. Powers's Private Capital Management, Chuck Royce's Royce & Associates and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Because Avid Technology, Inc. (NASDAQ:AVID) has experienced dropping sentiment from the smart money's best and brightest, it's easy to see that there exists a select few hedgies that elected to cut their positions entirely at the end of the second quarter. Intriguingly, Paul Tudor Jones's Tudor Investment Corp sold off the largest stake of all the hedgies we track, valued at about $0.2 million in stock. Ken Griffin's fund, Citadel Investment Group, also sold off its stock, about $0.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds at the end of the second quarter.
Legal insider trading, particularly when it's bullish, is most useful when the primary stock in question has seen transactions within the past half-year. Over the last half-year time frame, Avid Technology, Inc. (NASDAQ:AVID) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to Avid Technology, Inc. (NASDAQ:AVID). These stocks are The9 Limited (ADR) (NASDAQ:NCTY), Perfect World Co., Ltd. (ADR) (NASDAQ:PWRD), Rosetta Stone Inc (NYSE:RST), Glu Mobile Inc. (NASDAQ:GLUU), and KongZhong Corporation (ADR) (NASDAQ:KONG). All of these stocks are in the multimedia & graphics software industry and their market caps match AVID's market cap.