Is ACI Worldwide Inc (ACIW) Going to Burn These Hedge Funds?

Is ACI Worldwide Inc (NASDAQ:ACIW) a buy, sell, or hold? Prominent investors are in a bearish mood. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience.

In the eyes of most investors, hedge funds are viewed as worthless, outdated financial vehicles of years past. While there are over 8000 funds trading at present, we at Insider Monkey choose to focus on the crème de la crème of this club, around 450 funds. It is widely believed that this group controls the majority of the smart money’s total capital, and by keeping an eye on their top picks, we have unsheathed a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as beneficial, bullish insider trading sentiment is another way to break down the stock market universe. As the old adage goes: there are lots of motivations for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this method if you know what to do (learn more here).

With these “truths” under our belt, it’s important to take a glance at the latest action encompassing ACI Worldwide Inc (NASDAQ:ACIW).

Hedge fund activity in ACI Worldwide Inc (NASDAQ:ACIW)

In preparation for this quarter, a total of 12 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Claus Moller’s P2 Capital Partners had the most valuable position in ACI Worldwide Inc (NASDAQ:ACIW), worth close to $62.1 million, accounting for 10.6% of its total 13F portfolio. On P2 Capital Partners’s heels is Amy Minella of Cardinal Capital, with a $37.6 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Chuck Royce’s Royce & Associates, John C. Walker’s Stonerise Capital Management and Charles Clough’s Clough Capital Partners.

Judging by the fact that ACI Worldwide Inc (NASDAQ:ACIW) has experienced falling interest from the smart money, it’s safe to say that there exists a select few funds who sold off their positions entirely last quarter. At the top of the heap, Donald Chiboucis’s Columbus Circle Investors dropped the largest investment of all the hedgies we watch, comprising close to $14.2 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also dumped its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about ACI Worldwide Inc (NASDAQ:ACIW)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time frame, ACI Worldwide Inc (NASDAQ:ACIW) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to ACI Worldwide Inc (NASDAQ:ACIW). These stocks are National Instruments Corp (NASDAQ:NATI), Concur Technologies, Inc. (NASDAQ:CNQR), PTC Inc (NASDAQ:PMTC), Mentor Graphics Corp (NASDAQ:MENT), and Tyler Technologies, Inc. (NYSE:TYL). This group of stocks are in the technical & system software industry and their market caps match ACIW’s market cap.