Changyou.Com Ltd (ADR) (CYOU): Hedge Funds and Insiders Are Bearish, What Should You Do?

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Changyou.Com Ltd (ADR) (NASDAQ:CYOU) shareholders have witnessed a decrease in hedge fund sentiment of late.

Changyou.Com Ltd

In today’s marketplace, there are tons of metrics shareholders can use to track the equity markets. A couple of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top fund managers can trounce the broader indices by a healthy amount (see just how much).

Just as key, optimistic insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are lots of motivations for an insider to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, we’re going to take a gander at the recent action encompassing Changyou.Com Ltd (ADR) (NASDAQ:CYOU).

What have hedge funds been doing with Changyou.Com Ltd (ADR) (NASDAQ:CYOU)?

At the end of the fourth quarter, a total of 7 of the hedge funds we track were long in this stock, a change of -13% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Changyou.Com Ltd (ADR) (NASDAQ:CYOU). Citadel Investment Group has a $6.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Citadel Investment Group’s heels is Jim Simons of Renaissance Technologies, with a $3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Steven Cohen’s SAC Capital Advisors, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.

Because Changyou.Com Ltd (ADR) (NASDAQ:CYOU) has witnessed declining sentiment from hedge fund managers, logic holds that there were a few hedgies that elected to cut their full holdings heading into 2013. It’s worth mentioning that John Hurley’s Cavalry Asset Management cut the biggest investment of all the hedgies we track, comprising close to $2.6 million in stock.. Eric Semler’s fund, TCS Capital Management, also cut its stock, about $1.8 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds heading into 2013.

What have insiders been doing with Changyou.Com Ltd (ADR) (NASDAQ:CYOU)?

Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past six months. Over the latest six-month time frame, Changyou.Com Ltd (ADR) (NASDAQ:CYOU) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Changyou.Com Ltd (ADR) (NASDAQ:CYOU). These stocks are Shanda Games Limited(ADR) (NASDAQ:GAME), Konami Corp (ADR) (NYSE:KNM), Rovi Corporation (NASDAQ:ROVI), Cornerstone OnDemand, Inc. (NASDAQ:CSOD), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO). All of these stocks are in the multimedia & graphics software industry and their market caps are closest to CYOU’s market cap.

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