Servicesource International Inc (SREV): Are Hedge Funds Right About This Stock?

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What’s a smart Servicesource International Inc (NASDAQ:SREV) investor to do?

To many of your peers, hedge funds are seen as useless, outdated investment vehicles of an era lost to time. Although there are over 8,000 hedge funds with their doors open currently, Insider Monkey aim at the top tier of this club, around 525 funds. Analysts calculate that this group oversees the majority of the hedge fund industry’s total capital, and by keeping an eye on their best picks, we’ve spotted a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as key, positive insider trading sentiment is another way to look at the financial markets. There are many incentives for an executive to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this tactic if “monkeys” understand what to do (learn more here).

Servicesource International Inc (NASDAQ:SREV)

Thus, it’s important to study the recent info surrounding Servicesource International Inc (NASDAQ:SREV).

What does the smart money think about Servicesource International Inc (NASDAQ:SREV)?

Heading into Q3, a total of 13 of the hedge funds we track were bullish in this stock, a change of 18% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably.

Out of the hedge funds we follow, Rishi Bajaj, Toby Symonds, and Steve Tesoriere’s Altai Capital had the most valuable position in Servicesource International Inc (NASDAQ:SREV), worth close to $35.4 million, comprising 11.5% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $7.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Phil Frohlich’s Prescott Group Capital Management, Mark Broach’s Manatuck Hill Partners and Mark N. Diker’s Diker Management.

As one would understandably expect, specific money managers have been driving this bullishness. Altai Capital, managed by Rishi Bajaj, Toby Symonds, and Steve Tesoriere, initiated the most outsized position in Servicesource International Inc (NASDAQ:SREV). Altai Capital had 35.4 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $7.7 million investment in the stock during the quarter. The following funds were also among the new SREV investors: Phil Frohlich’s Prescott Group Capital Management, Mark Broach’s Manatuck Hill Partners, and Mark N. Diker’s Diker Management.

What have insiders been doing with Servicesource International Inc (NASDAQ:SREV)?

Insider buying made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Servicesource International Inc (NASDAQ:SREV) has experienced zero unique insiders buying, 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 Servicesource International Inc (NASDAQ:SREV). These stocks are Perficient, Inc. (NASDAQ:PRFT), CSG Systems International, Inc. (NASDAQ:CSGS), Tangoe Inc (NASDAQ:TNGO), Ebix Inc (NASDAQ:EBIX), and Descartes Systems Group (USA) (NASDAQ:DSGX). This group of stocks are in the business software & services industry and their market caps are closest to SREV’s market cap.

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