VirnetX Holding Corporation (NYSEAMEX:VHC) was in 5 hedge funds’ portfolio at the end of the first quarter of 2013. VHC has seen a decrease in hedge fund sentiment of late. There were 6 hedge funds in our database with VHC holdings at the end of the previous quarter.
If you’d ask most stock holders, hedge funds are viewed as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at present, we at Insider Monkey hone in on the masters of this club, about 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total asset base, and by keeping an eye on their best picks, we have uncovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as key, optimistic insider trading activity is another way to break down the world of equities. Obviously, there are many stimuli for an insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this tactic if piggybackers know what to do (learn more here).
Consequently, let’s take a peek at the recent action surrounding VirnetX Holding Corporation (NYSEAMEX:VHC).
Hedge fund activity in VirnetX Holding Corporation (NYSEAMEX:VHC)
At Q1’s end, a total of 5 of the hedge funds we track held long positions in this stock, a change of -17% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Eric Bannasch’s Cadian Capital had the largest position in VirnetX Holding Corporation (NYSEAMEX:VHC), worth close to $8 million, comprising 0.2% of its total 13F portfolio. On Cadian Capital’s heels is Ken Griffin of Citadel Investment Group, with a $6.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Lee Hobson’s Highside Capital Management, and Israel Englander’s Millennium Management.
Judging by the fact that VirnetX Holding Corporation (NYSEAMEX:VHC) has experienced bearish sentiment from the smart money, we can see that there was a specific group of money managers who sold off their entire stakes at the end of the first quarter. It’s worth mentioning that Daniel S. Och’s OZ Management said goodbye to the largest position of the 450+ funds we track, worth close to $2.3 million in stock.. D. E. Shaw’s fund, D E Shaw, also cut its call options., about $1.8 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds at the end of the first quarter.
How have insiders been trading VirnetX Holding Corporation (NYSEAMEX:VHC)?
Bullish insider trading is particularly usable when the company in question has seen transactions within the past half-year. Over the latest half-year time period, VirnetX Holding Corporation (NYSEAMEX:VHC) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to VirnetX Holding Corporation (NYSEAMEX:VHC). These stocks are J2 Global Inc (NASDAQ:JCOM), ExactTarget Inc (NYSE:ET), Demand Media Inc (NYSE:DMD), DealerTrack Technologies Inc (NASDAQ:TRAK), and Angie’s List Inc (NASDAQ:ANGI). All of these stocks are in the internet software & services industry and their market caps resemble VHC’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|J2 Global Inc (NASDAQ:JCOM)||12||0||5|
|ExactTarget Inc (NYSE:ET)||14||0||17|
|Demand Media Inc (NYSE:DMD)||13||0||3|
|DealerTrack Technologies Inc (NASDAQ:TRAK)||4||0||8|
|Angie’s List Inc (NASDAQ:ANGI)||12||0||6|
With the returns exhibited by the aforementioned tactics, retail investors must always keep an eye on hedge fund and insider trading sentiment, and VirnetX Holding Corporation (NYSEAMEX:VHC) shareholders fit into this picture quite nicely.