Digital Generation Inc (NASDAQ:DGIT) was in 9 hedge funds’ portfolio at the end of the fourth quarter of 2012. DGIT has experienced a decrease in activity from the world’s largest hedge funds of late. There were 9 hedge funds in our database with DGIT positions at the end of the previous quarter.
If you’d ask most investors, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation today, we hone in on the moguls of this group, about 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total asset base, and by tracking their top picks, we have figured out a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 outclassed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as integral, bullish insider trading sentiment is a second way to parse down the financial markets. Obviously, there are a number of incentives for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this tactic if you understand where to look (learn more here).
Now, we’re going to take a gander at the latest action encompassing Digital Generation Inc (NASDAQ:DGIT).
What does the smart money think about Digital Generation Inc (NASDAQ:DGIT)?
At year’s end, a total of 9 of the hedge funds we track held long positions in this stock, a change of 0% from the third quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, Jim Roumell’s Roumell Asset Management had the biggest position in Digital Generation Inc (NASDAQ:DGIT), worth close to $11.9 million, accounting for 7.6% of its total 13F portfolio. The second largest stake is held by Jon Bauer of Contrarian Capital, with a $2.2 million position; 1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Israel Englander’s Millennium Management, John Fichthorn’s Dialectic Capital Management and D. E. Shaw’s D E Shaw.
Due to the fact that Digital Generation Inc (NASDAQ:DGIT) has witnessed a declination in interest from the smart money, it’s easy to see that there exists a select few hedgies that decided to sell off their positions entirely in Q4. Intriguingly, Amy Minella’s Cardinal Capital dumped the largest stake of all the hedgies we key on, comprising an estimated $3.3 million in stock., and Jay Petschek and Steven Major of Corsair Capital Management was right behind this move, as the fund said goodbye to about $1.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Digital Generation Inc (NASDAQ:DGIT)?
Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time frame, Digital Generation Inc (NASDAQ:DGIT) has seen 3 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Digital Generation Inc (NASDAQ:DGIT). These stocks are Swisher Hygiene, Inc. (NASDAQ:SWSH), Limelight Networks, Inc. (NASDAQ:LLNW), Acquity Group Ltd (NYSEAMEX:AQ), PRGX Global Inc (NASDAQ:PRGX), and Reis Inc (NASDAQ:REIS). All of these stocks are in the business services industry and their market caps are closest to DGIT’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Swisher Hygiene, Inc. (NASDAQ:SWSH)||3||0||0|
|Limelight Networks, Inc. (NASDAQ:LLNW)||7||2||2|
|Acquity Group Ltd (NYSEAMEX:AQ)||3||0||0|
|PRGX Global Inc (NASDAQ:PRGX)||7||0||1|
|Reis Inc (NASDAQ:REIS)||3||0||0|
With the results exhibited by the aforementioned strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Digital Generation Inc (NASDAQ:DGIT) is no exception.