Active Network Inc (ACTV): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?

Is it smart to be bullish on Active Network Inc (NYSE:ACTV)?

At the moment, there are dozens of metrics investors can use to track their holdings. A couple of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can outperform their index-focused peers by a very impressive margin (see just how much).

Just as key, optimistic insider trading activity is another way to look at the financial markets. Just as you’d expect, there are a variety of motivations for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the valuable potential of this strategy if you know where to look (learn more here).

Thus, we’re going to study the recent info for Active Network Inc (NYSE:ACTV).

What does the smart money think about Active Network Inc (NYSE:ACTV)?

At Q2’s end, a total of 10 of the hedge funds we track were bullish in this stock, a change of -9% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.

According to our 13F database, Chuck Royce’s Royce & Associates had the biggest position in Active Network Inc (NYSE:ACTV), worth close to $13.6 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Lane Five Capital, managed by Lisa Rapuano, which held a $5.7 million position; 8.1% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Jim Simons’s Renaissance Technologies, Warren Lichtenstein’s Steel Partners and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Active Network Inc (NYSE:ACTV) has experienced a fall in interest from the smart money’s best and brightest, it’s safe to say that there were a few fund managers that elected to cut their entire stakes last quarter. It’s worth mentioning that Phil Frohlich’s Prescott Group Capital Management dumped the biggest position of all the hedgies we key on, totaling an estimated $1.3 million in stock, and Mark N. Diker of Diker Management was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.

What do corporate executives and insiders think about Active Network Inc (NYSE:ACTV)?

Legal insider trading, particularly when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time frame, Active Network Inc (NYSE:ACTV) has experienced 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 Active Network Inc (NYSE:ACTV). These stocks are Actuate Corporation (NASDAQ:BIRT), Guidance Software, Inc. (NASDAQ:GUID), RealNetworks Inc (NASDAQ:RNWK), Market Leader Inc (NASDAQ:LEDR), and Vringo, Inc. (NYSEAMEX:VRNG). All of these stocks are in the application software industry and their market caps resemble ACTV’s market cap.

Using the returns demonstrated by Insider Monkey’s analyses, regular investors must always watch hedge fund and insider trading sentiment, and Active Network Inc (NYSE:ACTV) applies perfectly to this mantra.

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