To many investors, hedge funds are assumed to be delayed, outdated financial tools of an era lost to time. Although there are more than 8,000 hedge funds in operation today, this site focuses on the moguls of this group, around 525 funds. Analysts calculate that this group controls most of all hedge funds’ total capital, and by paying attention to their best equity investments, we’ve revealed a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Equally as crucial, bullish insider trading activity is a second way to look at the investments you’re interested in. There are plenty of motivations for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this method if you know where to look (learn more here).
What’s more, let’s study the recent info for Demand Media Inc (NYSE:DMD).
What does the smart money think about Demand Media Inc (NYSE:DMD)?
At Q2’s end, a total of 13 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier.
Since Demand Media Inc (NYSE:DMD) has experienced declining interest from the smart money’s best and brightest, we can see that there lies a certain “tier” of hedgies who were dropping their full holdings in Q1. At the top of the heap, Mark N. Diker’s Diker Management sold off the largest investment of the 450+ funds we watch, comprising about $4.3 million in stock. Jay Petschek and Steven Major’s fund, Corsair Capital Management, also dropped its stock, about $0.8 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Demand Media Inc (NYSE:DMD)
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time frame, Demand Media Inc (NYSE:DMD) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Demand Media Inc (NYSE:DMD). These stocks are DealerTrack Technologies Inc (NASDAQ:TRAK), Angie’s List Inc (NASDAQ:ANGI), Digital River, Inc. (NASDAQ:DRIV), InterNAP Network Services (NASDAQ:INAP), and VirnetX Holding Corporation (NYSEAMEX:VHC). This group of stocks are the members of the internet software & services industry and their market caps are similar to DMD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| DealerTrack Technologies Inc (NASDAQ:TRAK) | 4 | 0 | 0 |
| Angie’s List Inc (NASDAQ:ANGI) | 15 | 0 | 0 |
| Digital River, Inc. (NASDAQ:DRIV) | 7 | 0 | 0 |
| InterNAP Network Services (NASDAQ:INAP) | 6 | 0 | 0 |
| VirnetX Holding Corporation (NYSEAMEX:VHC) | 7 | 0 | 0 |
Using the returns demonstrated by the previously mentioned tactics, regular investors should always pay attention to hedge fund and insider trading sentiment, and Demand Media Inc (NYSE:DMD) is no exception.
