NIC Inc. (EGOV): Hedge Funds Are Bullish and Insiders Are Undecided, What Should You Do?

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Is it smart to be bullish on NIC Inc. (NASDAQ:EGOV)?

In the eyes of many of your peers, hedge funds are assumed to be bloated, old financial tools of a forgotten age. Although there are more than 8,000 hedge funds trading today, Insider Monkey aim at the crème de la crème of this club, around 525 funds. Analysts calculate that this group controls the lion’s share of all hedge funds’ total capital, and by watching their best equity investments, we’ve deciphered a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat 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 outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as useful, optimistic insider trading activity is a second way to look at the investments you’re interested in. Obviously, there are a number of stimuli for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this method if investors understand where to look (learn more here).


Now that that’s out of the way, let’s discuss the newest info for NIC Inc. (NASDAQ:EGOV).

How have hedgies been trading NIC Inc. (NASDAQ:EGOV)?

At the end of the second quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 120% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully.

Out of the hedge funds we follow, Jim Simons’s Renaissance Technologies had the largest position in NIC Inc. (NASDAQ:EGOV), worth close to $5.5 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $2.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Cliff Asness’s AQR Capital Management, Ken Grossman and Glen Schneider’s SG Capital Management and Matthew Tewksbury’s Stevens Capital Management.

As one would understandably expect, certain money managers have jumped into NIC Inc. (NASDAQ:EGOV) headfirst. Renaissance Technologies, managed by Jim Simons, established the most valuable position in NIC Inc. (NASDAQ:EGOV). Renaissance Technologies had 5.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $2.9 million position during the quarter. The other funds with brand new EGOV positions are Cliff Asness’s AQR Capital Management, Ken Grossman and Glen Schneider’s SG Capital Management, and Matthew Tewksbury’s Stevens Capital Management.

Insider trading activity in NIC Inc. (NASDAQ:EGOV)

Legal insider trading, particularly when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, NIC Inc. (NASDAQ:EGOV) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to NIC Inc. (NASDAQ:EGOV). These stocks are Jive Software Inc (NASDAQ:JIVE), Manhattan Associates, Inc. (NASDAQ:MANH), Advent Software, Inc. (NASDAQ:ADVS), Progress Software Corporation (NASDAQ:PRGS), and Synchronoss Technologies, Inc. (NASDAQ:SNCR). This group of stocks are in the application software industry and their market caps are closest to EGOV’s market cap.

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