Hedge Funds Are Crazy About Tibco Software Inc. (TIBX)

Is Tibco Software Inc. (NASDAQ:TIBX) a buy?

In the eyes of many traders, hedge funds are seen as bloated, old investment tools of an era lost to time. Although there are In excess of 8,000 hedge funds trading currently, Insider Monkey focuses on the upper echelon of this group, around 525 funds. It is widely held that this group controls the majority of the hedge fund industry’s total capital, and by keeping an eye on their best equity investments, we’ve unearthed a few investment strategies that have historically outpaced the 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 33 percentage points in 11 months (explore the details and some picks here).

Just as key, optimistic insider trading activity is a second way to look at the marketplace. As the old adage goes: there are a variety of stimuli for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if piggybackers know where to look (learn more here).

Furthermore, it’s important to discuss the newest info surrounding Tibco Software Inc. (NASDAQ:TIBX).

How have hedgies been trading Tibco Software Inc. (NASDAQ:TIBX)?

At the end of the second quarter, a total of 35 of the hedge funds we track held long positions in this stock, a change of 17% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings considerably.

Out of the hedge funds we follow, Rob Citrone’s Discovery Capital Management had the most valuable position in Tibco Software Inc. (NASDAQ:TIBX), worth close to $113.7 million, accounting for 1.2% of its total 13F portfolio. Coming in second is Dan Loeb of Third Point, with a $107 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Panayotis Sparaggis’s Alkeon Capital Management, Lee Ainslie’s Maverick Capital and D. E. Shaw’s D E Shaw.

Now, specific money managers have been driving this bullishness. Soros Fund Management, managed by George Soros, established the most valuable position in Tibco Software Inc. (NASDAQ:TIBX). Soros Fund Management had 171.5 million invested in the company at the end of the quarter. Rob Citrone’s Discovery Capital Management also initiated a $113.7 million position during the quarter. The following funds were also among the new TIBX investors: Dan Loeb’s Third Point, Panayotis æTakisÆ Sparaggis’s Alkeon Capital Management, and Lee Ainslie’s Maverick Capital.

How are insiders trading Tibco Software Inc. (NASDAQ:TIBX)?

Bullish insider trading is most useful when the company in focus has seen transactions within the past 180 days. Over the last half-year time period, Tibco Software Inc. (NASDAQ:TIBX) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Tibco Software Inc. (NASDAQ:TIBX). These stocks are SS and C Technologies Holdings Inc (NASDAQ:SSNC), Solera Holdings Inc (NYSE:SLH), Jack Henry & Associates, Inc. (NASDAQ:JKHY), Informatica Corporation (NASDAQ:INFA), and Aspen Technology, Inc. (NASDAQ:AZPN). This group of stocks are in the business software & services industry and their market caps are closest to TIBX’s market cap.

Using the returns explained by the previously mentioned research, regular investors must always keep one eye on hedge fund and insider trading activity, and Tibco Software Inc. (NASDAQ:TIBX) is no exception.

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