Hedge Funds Are Buying Market Leader Inc (LEDR)

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Is Market Leader Inc (NASDAQ:LEDR) undervalued? The best stock pickers are in an optimistic mood. The number of long hedge fund bets moved up by 2 in recent months.

If you’d ask most traders, hedge funds are perceived as slow, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, we choose to focus on the leaders of this group, around 450 funds. Most estimates calculate that this group controls most of the smart money’s total asset base, and by paying attention to their highest performing stock picks, we have formulated a few investment strategies that have historically outstripped the broader indices. 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 began to 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 integral, positive insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are lots of incentives for an executive to downsize shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this tactic if “monkeys” understand what to do (learn more here).

Keeping this in mind, it’s important to take a peek at the key action regarding Market Leader Inc (NASDAQ:LEDR).

How have hedgies been trading Market Leader Inc (NASDAQ:LEDR)?

In preparation for this quarter, a total of 6 of the hedge funds we track were bullish in this stock, a change of 50% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.

Market Leader Inc (LEDR)Of the funds we track, Ariel Investments, managed by John W. Rogers, holds the most valuable position in Market Leader Inc (NASDAQ:LEDR). Ariel Investments has a $11.3 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $8.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Richard Driehaus’s Driehaus Capital, Lisa Rapuano’s Lane Five Capital and Andy Redleaf’s Whitebox Advisors.

Now, key hedge funds have jumped into Market Leader Inc (NASDAQ:LEDR) headfirst. Whitebox Advisors, managed by Andy Redleaf, assembled the most valuable position in Market Leader Inc (NASDAQ:LEDR). Whitebox Advisors had 0.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.2 million investment in the stock during the quarter.

What do corporate executives and insiders think about Market Leader Inc (NASDAQ:LEDR)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, Market Leader Inc (NASDAQ:LEDR) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Market Leader Inc (NASDAQ:LEDR). These stocks are Agilysys, Inc. (NASDAQ:AGYS), Vringo, Inc. (NYSEAMEX:VRNG), Zix Corporation (NASDAQ:ZIXI), Active Network Inc (NYSE:ACTV), and American Software, Inc. (NASDAQ:AMSWA). All of these stocks are in the application software industry and their market caps resemble LEDR’s market cap.

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