Do Hedge Funds and Insiders Love Avid Technology, Inc. (AVID)?: The9 Limited (ADR) (NCTY), Perfect World Co., Ltd. (ADR) (PWRD)

Avid Technology, Inc. (NASDAQ:AVID) was in 12 hedge funds’ portfolio at the end of December. AVID has experienced a decrease in hedge fund sentiment in recent months. There were 12 hedge funds in our database with AVID positions at the end of the previous quarter.

Avid Technology, Inc. (NASDAQ:AVID)According to most investors, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the aristocrats of this group, close to 450 funds. It is widely believed that this group oversees the lion’s share of all hedge funds’ total capital, and by keeping an eye on their best equity investments, we have unsheathed a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Equally as important, optimistic insider trading activity is another way to break down the world of equities. As the old adage goes: there are lots of stimuli for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this tactic if piggybackers understand where to look (learn more here).

Now, let’s take a glance at the recent action encompassing Avid Technology, Inc. (NASDAQ:AVID).

What does the smart money think about Avid Technology, Inc. (NASDAQ:AVID)?

At the end of the fourth quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably.

Of the funds we track, Blum Capital Partners, managed by Richard Blum, holds the biggest position in Avid Technology, Inc. (NASDAQ:AVID). Blum Capital Partners has a $55 million position in the stock, comprising 8.8% of its 13F portfolio. On Blum Capital Partners’s heels is Gregg J. Powers of Private Capital Management, with a $15 million position; 0% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Chuck Royce’s Royce & Associates, Kelly Cardwell’s Central Square Management and Israel Englander’s Millennium Management.

Because Avid Technology, Inc. (NASDAQ:AVID) has experienced declining sentiment from hedge fund managers, logic holds that there were a few hedge funds that decided to sell off their full holdings in Q4. It’s worth mentioning that Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners dumped the largest investment of all the hedgies we track, worth close to $0 million in stock., and Mike Vranos of Ellington was right behind this move, as the fund dumped about $0 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Avid Technology, Inc. (NASDAQ:AVID)

Insider purchases made by high-level executives is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time period, Avid Technology, Inc. (NASDAQ:AVID) has seen 1 unique insiders buying, and zero 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 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 are closest to AVID’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
The9 Limited (ADR) (NASDAQ:NCTY) 2 0 0
Perfect World Co., Ltd. (ADR) (NASDAQ:PWRD) 6 0 0
Rosetta Stone Inc (NYSE:RST) 5 1 5
Glu Mobile Inc. (NASDAQ:GLUU) 7 4 1
KongZhong Corporation (ADR) (NASDAQ:KONG) 3 0 0

With the results shown by Insider Monkey’s time-tested strategies, everyday investors should always monitor hedge fund and insider trading activity, and Avid Technology, Inc. (NASDAQ:AVID) applies perfectly to this mantra.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.