Here is What Hedge Funds Think About Guidance Software, Inc. (GUID)

Should Guidance Software, Inc. (NASDAQ:GUID) investors track the following data?

If you were to ask many traders, hedge funds are perceived as bloated, outdated financial vehicles of an era lost to time. Although there are In excess of 8,000 hedge funds with their doors open currently, Insider Monkey aim at the crème de la crème of this group, about 525 funds. It is assumed that this group controls the majority of the smart money’s total capital, and by monitoring their highest quality investments, we’ve determined a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as useful, bullish insider trading activity is a second way to look at the investments you’re interested in. Obviously, there are a variety of reasons for a corporate insider to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).

Thus, it’s important to discuss the recent info surrounding Guidance Software, Inc. (NASDAQ:GUID).

How are hedge funds trading Guidance Software, Inc. (NASDAQ:GUID)?

Heading into Q3, a total of 6 of the hedge funds we track held long positions in this stock, a change of -25% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially.

When using filings from the hedgies we track, Mario Gabelli’s GAMCO Investors had the biggest position in Guidance Software, Inc. (NASDAQ:GUID), worth close to $2.3 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Lanexa Global Management, managed by Ian P. Murray, which held a $2.2 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include John Zaro’s Bourgeon Capital, Phil Frohlich’s Prescott Group Capital Management and Jim Simons’s Renaissance Technologies.

Since Guidance Software, Inc. (NASDAQ:GUID) has experienced a fall in interest from the entirety of the hedge funds we track, logic holds that there were a few fund managers that slashed their entire stakes last quarter. Intriguingly, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors cut the biggest stake of the “upper crust” of funds we watch, totaling an estimated $1.3 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $0.7 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds last quarter.

How are insiders trading Guidance Software, Inc. (NASDAQ:GUID)?

Insider buying is at its handiest when the company in question has experienced transactions within the past six months. Over the last half-year time period, Guidance Software, Inc. (NASDAQ:GUID) has experienced zero unique insiders buying, 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 Guidance Software, Inc. (NASDAQ:GUID). These stocks are DTS Inc. (NASDAQ:DTSI), Active Network Inc (NYSE:ACTV), Vringo, Inc. (NYSEAMEX:VRNG), Actuate Corporation (NASDAQ:BIRT), and RealNetworks Inc (NASDAQ:RNWK). All of these stocks are in the application software industry and their market caps are closest to GUID’s market cap.