Guidance Software, Inc. (NASDAQ:GUID) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months.
To most shareholders, hedge funds are seen as slow, old investment tools of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey choose to focus on the masters of this group, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total capital, and by paying attention to their best stock picks, we have found a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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).
Just as important, positive insider trading sentiment is another way to break down the investments you’re interested in. There are lots of incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here).
Consequently, it’s important to take a look at the latest action regarding Guidance Software, Inc. (NASDAQ:GUID).
What have hedge funds been doing with Guidance Software, Inc. (NASDAQ:GUID)?
Heading into Q2, a total of 8 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 select group of key hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Phil Frohlich’s Prescott Group Capital Management had the most valuable position in Guidance Software, Inc. (NASDAQ:GUID), worth close to $3.4 million, accounting for 0.8% of its total 13F portfolio. The second largest stake is held by John Zaro of Bourgeon Capital, with a $2.4 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Mario Gabelli’s GAMCO Investors and Israel Englander’s Millennium Management.
Seeing as Guidance Software, Inc. (NASDAQ:GUID) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of fund managers who were dropping their entire stakes at the end of the first quarter. It’s worth mentioning that Ian P. Murray’s Lanexa Global Management said goodbye to the largest investment of the 450+ funds we monitor, valued at an estimated $3.9 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Guidance Software, Inc. (NASDAQ:GUID)?
Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time frame, Guidance Software, Inc. (NASDAQ:GUID) has experienced 2 unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Guidance Software, Inc. (NASDAQ:GUID). These stocks are DTS Inc. (NASDAQ:DTSI), Active Network Inc (NYSE:ACTV), Vringo, Inc. (NYSEAMEX:VRNG), Actuate Corporation (NASDAQ:BIRT), and RealNetworks Inc (NASDAQ:RNWK). This group of stocks belong to the application software industry and their market caps are similar to GUID’s market cap.