Is Vringo, Inc. (NYSEAMEX:VRNG) the right investment to pursue these days? Investors who are in the know are taking a bullish view. The number of long hedge fund bets improved by 2 in recent months.
In the eyes of most investors, hedge funds are perceived as underperforming, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey look at the aristocrats of this club, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total asset base, and by paying attention to their best stock picks, we have spotted a number of investment strategies that have historically outpaced Mr. Market. 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 started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as key, positive insider trading activity is another way to parse down the marketplace. Just as you’d expect, there are plenty of reasons for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this method if shareholders know where to look (learn more here).
Keeping this in mind, we’re going to take a look at the recent action encompassing Vringo, Inc. (NYSEAMEX:VRNG).
What have hedge funds been doing with Vringo, Inc. (NYSEAMEX:VRNG)?
At the end of the fourth quarter, a total of 6 of the hedge funds we track were long in this stock, a change of 50% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially.
Of the funds we track, Millennium Management, managed by Israel Englander, holds the most valuable position in Vringo, Inc. (NYSEAMEX:VRNG). Millennium Management has a $3.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Millennium Management’s heels is Mark Kingdon of Kingdon Capital, with a $1.4 million call position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Ken Griffin’s Citadel Investment Group, and Andy Redleaf’s Whitebox Advisors.
As industrywide interest jumped, key money managers have been driving this bullishness. Kingdon Capital, managed by Mark Kingdon, established the biggest call position in Vringo, Inc. (NYSEAMEX:VRNG). Kingdon Capital had 1.4 million invested in the company at the end of the quarter. Andy Redleaf’s Whitebox Advisors also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Mark Kingdon’s Kingdon Capital and Steven Cohen’s SAC Capital Advisors.
How have insiders been trading Vringo, Inc. (NYSEAMEX:VRNG)?
Insider buying is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time period, Vringo, Inc. (NYSEAMEX:VRNG) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Vringo, Inc. (NYSEAMEX:VRNG). These stocks are Actuate Corporation (NASDAQ:BIRT), Market Leader Inc (NASDAQ:LEDR), Guidance Software, Inc. (NASDAQ:GUID), RealNetworks Inc (NASDAQ:RNWK), and Active Network Inc (NYSE:ACTV). This group of stocks are the members of the application software industry and their market caps resemble VRNG’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Actuate Corporation (NASDAQ:BIRT)||14||0||0|
|Market Leader Inc (NASDAQ:LEDR)||4||0||2|
|Guidance Software, Inc. (NASDAQ:GUID)||8||2||4|
|RealNetworks Inc (NASDAQ:RNWK)||7||0||1|
|Active Network Inc (NYSE:ACTV)||11||3||6|
With the returns demonstrated by our research, everyday investors must always monitor hedge fund and insider trading activity, and Vringo, Inc. (NYSEAMEX:VRNG) is an important part of this process.