Hedge Funds Are Crazy About MICROS Systems, Inc. (MCRS)

Is MICROS Systems, Inc. (NASDAQ:MCRS) a buy, sell, or hold? Investors who are in the know are becoming more confident. The number of long hedge fund positions increased by 2 in recent months.

In the eyes of most investors, hedge funds are viewed as slow, outdated investment vehicles of yesteryear. While there are over 8000 funds trading today, we at Insider Monkey hone in on the upper echelon of this group, around 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by watching their best investments, we have formulated a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced 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 23.3 percentage points in 8 months (see all of our picks from August).

Just as important, optimistic insider trading sentiment is another way to break down the investments you’re interested in. Obviously, there are a number of reasons for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if investors understand where to look (learn more here).

Keeping this in mind, it’s important to take a gander at the recent action surrounding MICROS Systems, Inc. (NASDAQ:MCRS).

What have hedge funds been doing with MICROS Systems, Inc. (NASDAQ:MCRS)?

At Q1’s end, a total of 22 of the hedge funds we track were long in this stock, a change of 10% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially.

Of the funds we track, Jeffrey Ubben’s ValueAct Capital had the most valuable position in MICROS Systems, Inc. (NASDAQ:MCRS), worth close to $269.6 million, accounting for 3% of its total 13F portfolio. Sitting at the No. 2 spot is Robert Joseph Caruso of Select Equity Group, with a $154.3 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include Jim Simons’s Renaissance Technologies, David Costen Haley’s HBK Investments and Chuck Royce’s Royce & Associates.

As industrywide interest jumped, some big names have been driving this bullishness. ValueAct Capital, managed by Jeffrey Ubben, initiated the largest position in MICROS Systems, Inc. (NASDAQ:MCRS). ValueAct Capital had 269.6 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $27.3 million investment in the stock during the quarter. The other funds with brand new MCRS positions are D. E. Shaw’s D E Shaw, Brad Gerstner’s Altimeter Capital Management, and Israel Englander’s Catapult Capital Management.

How have insiders been trading MICROS Systems, Inc. (NASDAQ:MCRS)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time frame, MICROS Systems, Inc. (NASDAQ:MCRS) has experienced zero unique insiders buying, and 2 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 MICROS Systems, Inc. (NASDAQ:MCRS). These stocks are Splunk Inc (NASDAQ:SPLK), Cadence Design Systems Inc (NASDAQ:CDNS), Fortinet Inc (NASDAQ:FTNT), and CommVault Systems, Inc. (NASDAQ:CVLT). All of these stocks are in the application software industry and their market caps match MCRS’s market cap.

With the returns demonstrated by Insider Monkey’s tactics, retail investors must always watch hedge fund and insider trading sentiment, and MICROS Systems, Inc. (NASDAQ:MCRS) is no exception.

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