Do Hedge Funds and Insiders Love Acacia Research Corporation (ACTG)?

Acacia Research Corporation (NASDAQ:ACTG) was in 21 hedge funds’ portfolio at the end of March. ACTG has seen an increase in activity from the world’s largest hedge funds of late. There were 19 hedge funds in our database with ACTG positions at the end of the previous quarter.

In the eyes of most investors, hedge funds are perceived as underperforming, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open today, we at Insider Monkey hone in on the bigwigs of this group, about 450 funds. It is widely believed that this group oversees the lion’s share of the hedge fund industry’s total asset base, and by tracking their best investments, we have unearthed a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, optimistic insider trading activity is a second way to parse down the marketplace. As the old adage goes: there are plenty of stimuli for an executive to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this strategy if shareholders know where to look (learn more here).

Now, it’s important to take a look at the key action surrounding Acacia Research Corporation (NASDAQ:ACTG).

What does the smart money think about Acacia Research Corporation (NASDAQ:ACTG)?

In preparation for this quarter, a total of 21 of the hedge funds we track were long in this stock, a change of 11% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially.

When looking at the hedgies we track, Soros Fund Management, managed by George Soros, holds the largest position in Acacia Research Corporation (NASDAQ:ACTG). Soros Fund Management has a $109.5 million position in the stock, comprising 1.3% of its 13F portfolio. The second largest stake is held by Jay Petschek and Steven Major of Corsair Capital Management, with a $35.4 million position; 4.8% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Bill Miller’s Legg Mason Capital Management, D. E. Shaw’s D E Shaw and Glenn Russell Dubin’s Highbridge Capital Management.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Alydar Capital, managed by John Murphy, assembled the biggest call position in Acacia Research Corporation (NASDAQ:ACTG). Alydar Capital had 1.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are John W. Rogers’s Ariel Investments and Steven Cohen’s SAC Capital Advisors.

Insider trading activity in Acacia Research Corporation (NASDAQ:ACTG)

Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time frame, Acacia Research Corporation (NASDAQ:ACTG) has experienced zero unique insiders buying, and 7 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 Acacia Research Corporation (NASDAQ:ACTG). These stocks are National Technical Systems, Inc. (NASDAQ:NTSC), National Research Corporation (NASDAQ:NRCI), Qiagen NV (NASDAQ:QGEN), Forrester Research, Inc. (NASDAQ:FORR), and Myriad Genetics, Inc. (NASDAQ:MYGN). This group of stocks belong to the research services industry and their market caps resemble ACTG’s market cap.

With the returns shown by Insider Monkey’s tactics, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Acacia Research Corporation (NASDAQ:ACTG) applies perfectly to this mantra.

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