Pegasystems Inc. (NASDAQ:PEGA) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late.
In the eyes of most traders, hedge funds are viewed as slow, old financial vehicles of the past. While there are greater than 8000 funds in operation at present, we choose to focus on the top tier of this group, close to 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total capital, and by tracking their highest performing stock picks, we have uncovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Just as key, optimistic insider trading sentiment is another way to break down the financial markets. Obviously, there are plenty of motivations for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if shareholders understand what to do (learn more here).
Keeping this in mind, let’s take a glance at the recent action surrounding Pegasystems Inc. (NASDAQ:PEGA).
How have hedgies been trading Pegasystems Inc. (NASDAQ:PEGA)?
At Q1’s end, a total of 10 of the hedge funds we track were long in this stock, a change of 43% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably.
When looking at the hedgies we track, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Pegasystems Inc. (NASDAQ:PEGA). Fisher Asset Management has a $20.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Sanford J. Colen of Apex Capital, with a $16.3 million position; 1.2% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and Chuck Royce’s Royce & Associates.
Now, key money managers were leading the bulls’ herd. Ellington, managed by Mike Vranos, established the biggest position in Pegasystems Inc. (NASDAQ:PEGA). Ellington had 0.6 million invested in the company at the end of the quarter. Steven Cohen’s SAC Capital Advisors also initiated a $0.5 million position during the quarter. The following funds were also among the new PEGA investors: Paul Tudor Jones’s Tudor Investment Corp and Matthew Tewksbury’s Stevens Capital Management.
What have insiders been doing with Pegasystems Inc. (NASDAQ:PEGA)?
Insider buying is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the latest six-month time frame, Pegasystems Inc. (NASDAQ:PEGA) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Pegasystems Inc. (NASDAQ:PEGA). These stocks are Blackbaud, Inc. (NASDAQ:BLKB), Interactive Intelligence Group Inc (NASDAQ:ININ), MicroStrategy Incorporated (NASDAQ:MSTR), NetScout Systems, Inc. (NASDAQ:NTCT), and Bottomline Technologies (NASDAQ:EPAY). This group of stocks are the members of the business software & services industry and their market caps are closest to PEGA’s market cap.