Is Aspen Technology, Inc. (AZPN) Going to Burn These Hedge Funds?

Aspen Technology, Inc. (NASDAQ:AZPN) investors should be aware of a decrease in support from the world’s most elite money managers recently.

If you’d ask most traders, hedge funds are seen as underperforming, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey look at the moguls of this club, close to 450 funds. It is widely believed that this group has its hands on most of the smart money’s total asset base, and by monitoring their best stock picks, we have figured out a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per 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 outclassed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as key, positive insider trading activity is a second way to parse down the financial markets. There are many reasons for an executive to drop shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the useful potential of this strategy if shareholders understand where to look (learn more here).

With all of this in mind, let’s take a gander at the latest action encompassing Aspen Technology, Inc. (NASDAQ:AZPN).

Hedge fund activity in Aspen Technology, Inc. (NASDAQ:AZPN)

At the end of the fourth quarter, a total of 15 of the hedge funds we track were bullish in this stock, a change of -25% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably.

Of the funds we track, Alkeon Capital Management, managed by Panayotis æTakisÆ Sparaggis, holds the largest position in Aspen Technology, Inc. (NASDAQ:AZPN). Alkeon Capital Management has a $101 million position in the stock, comprising 3% of its 13F portfolio. Coming in second is Soros Fund Management, managed by George Soros, which held a $32 million position; less than 1% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include D. E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’s Renaissance Technologies.

Due to the fact that Aspen Technology, Inc. (NASDAQ:AZPN) has witnessed a declination in interest from the smart money, it’s easy to see that there were a few hedge funds that decided to sell off their positions entirely at the end of the year. It’s worth mentioning that John Murphy’s Alydar Capital sold off the biggest investment of the 450+ funds we watch, totaling close to $7 million in stock., and Richard Driehaus of Driehaus Capital was right behind this move, as the fund dumped about $6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 5 funds at the end of the year.

Insider trading activity in Aspen Technology, Inc. (NASDAQ:AZPN)

Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time frame, Aspen Technology, Inc. (NASDAQ:AZPN) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Aspen Technology, Inc. (NASDAQ:AZPN). These stocks are Solera Holdings Inc (NYSE:SLH), Jack Henry & Associates, Inc. (NASDAQ:JKHY), SS and C Technologies Holdings Inc (NASDAQ:SSNC), Informatica Corporation (NASDAQ:INFA), and Tibco Software Inc. (NASDAQ:TIBX). This group of stocks belong to the business software & services industry and their market caps resemble AZPN’s market cap.

With the returns exhibited by the aforementioned time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Aspen Technology, Inc. (NASDAQ:AZPN) applies perfectly to this mantra.

Click here to learn why you should track hedge funds