NetScout Systems, Inc. (NASDAQ:NTCT) investors should be aware of an increase in hedge fund sentiment lately.
In the eyes of most traders, hedge funds are assumed to be worthless, old investment tools of years past. While there are greater than 8000 funds in operation at present, we at Insider Monkey hone in on the aristocrats of this club, around 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total capital, and by paying attention to their top picks, we have formulated a few investment strategies that have historically outpaced 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 topped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as important, optimistic insider trading sentiment is another way to parse down the world of equities. There are a number of incentives for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this method if shareholders understand where to look (learn more here).
With all of this in mind, it’s important to take a glance at the recent action encompassing NetScout Systems, Inc. (NASDAQ:NTCT).
What does the smart money think about NetScout Systems, Inc. (NASDAQ:NTCT)?
At year’s end, a total of 15 of the hedge funds we track held long positions in this stock, a change of 25% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially.
When looking at the hedgies we track, Eric Bannasch’s Cadian Capital had the largest position in NetScout Systems, Inc. (NASDAQ:NTCT), worth close to $22 million, accounting for 0.7% of its total 13F portfolio. On Cadian Capital’s heels is Gregory A. Weaver of Invicta Capital Management, with a $15 million position; 0.2% of its 13F portfolio is allocated to the 
As industrywide interest jumped, some big names have been driving this bullishness. Kingdon Capital, managed by Mark Kingdon, created the most outsized position in NetScout Systems, Inc. (NASDAQ:NTCT). Kingdon Capital had 3 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $1 million position during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management and Glenn Russell Dubin’s Highbridge Capital Management.
Insider trading activity in NetScout Systems, Inc. (NASDAQ:NTCT)
Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past half-year. Over the latest half-year time period, NetScout Systems, Inc. (NASDAQ:NTCT) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to NetScout Systems, Inc. (NASDAQ:NTCT). These stocks are Blackbaud, Inc. (NASDAQ:BLKB), Interactive Intelligence Group Inc (NASDAQ:ININ), MicroStrategy Incorporated (NASDAQ:MSTR), Bottomline Technologies (NASDAQ:EPAY), and Pegasystems Inc. (NASDAQ:PEGA). This group of stocks are the members of the business software & services industry and their market caps are similar to NTCT’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Blackbaud, Inc. (NASDAQ:BLKB) | 6 | 0 | 5 |
| Interactive Intelligence Group Inc (NASDAQ:ININ) | 3 | 1 | 8 |
| MicroStrategy Incorporated (NASDAQ:MSTR) | 13 | 1 | 0 |
| Bottomline Technologies (NASDAQ:EPAY) | 8 | 0 | 7 |
| Pegasystems Inc. (NASDAQ:PEGA) | 6 | 0 | 5 |
With the returns shown by our studies, retail investors must always monitor hedge fund and insider trading sentiment, and NetScout Systems, Inc. (NASDAQ:NTCT) applies perfectly to this mantra.
