This Metric Says You Are Smart to Sell Bottomline Technologies (EPAY)

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Bottomline Technologies (NASDAQ:EPAY) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months.

To most stock holders, hedge funds are perceived as underperforming, old investment tools of years past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the leaders of this group, close to 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total asset base, and by watching their best equity investments, we have discovered a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as beneficial, bullish insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are a variety of reasons for an executive to downsize 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 investors understand what to do (learn more here).

With these “truths” under our belt, we’re going to take a peek at the latest action regarding Bottomline Technologies (NASDAQ:EPAY).

What does the smart money think about Bottomline Technologies (NASDAQ:EPAY)?

At Q1′s end, a total of 7 of the hedge funds we track were long in this stock, a change of -22% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully.

Bottomline Technologies (NASDAQ:EPAY)According to our comprehensive database, John Murphy’s Alydar Capital had the largest position in Bottomline Technologies (NASDAQ:EPAY), worth close to $7.1 million, comprising 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include D. E. Shaw’s D E Shaw, Paul Tudor Jones’s Tudor Investment Corp and Israel Englander’s Millennium Management.

Due to the fact that Bottomline Technologies (NASDAQ:EPAY) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few fund managers that slashed their positions entirely at the end of the first quarter. Interestingly, Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the largest stake of the “upper crust” of funds we track, worth about $8.2 million in stock., and Richard Driehaus of Driehaus Capital was right behind this move, as the fund dumped about $1.3 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds at the end of the first quarter.

How are insiders trading Bottomline Technologies (NASDAQ:EPAY)?

Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time frame, Bottomline Technologies (NASDAQ:EPAY) has seen zero unique insiders buying, and 7 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Bottomline Technologies (NASDAQ:EPAY). These stocks are Blackbaud, Inc. (NASDAQ:BLKB), Interactive Intelligence Group Inc (NASDAQ:ININ), MicroStrategy Incorporated (NASDAQ:MSTR), NetScout Systems, Inc. (NASDAQ:NTCT), and Pegasystems Inc. (NASDAQ:PEGA). All of these stocks are in the business software & services industry and their market caps are closest to EPAY’s market cap.

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