In the eyes of most investors, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open at the moment, we hone in on the upper echelon of this club, around 450 funds. It is estimated that this group controls the lion’s share of the hedge fund industry’s total asset base, and by watching their highest performing stock picks, we have deciphered a number of investment strategies that have historically outperformed the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as integral, optimistic insider trading activity is another way to parse down the marketplace. Just as you’d expect, there are a number of motivations for a corporate insider to sell 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 investors know where to look (learn more here).
With these “truths” under our belt, let’s take a gander at the recent action regarding Mitek Systems, Inc. (NASDAQ:MITK).
How have hedgies been trading Mitek Systems, Inc. (NASDAQ:MITK)?
In preparation for this quarter, a total of 5 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly.
Of the funds we track, Phil Frohlich’s Prescott Group Capital Management had the biggest position in Mitek Systems, Inc. (NASDAQ:MITK), worth close to $2.8 million, accounting for 0.6% of its total 13F portfolio. Sitting at the No. 2 spot is Richard Driehaus of Driehaus Capital, with a $1.6 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Mario Gabelli’s GAMCO Investors, and Cliff Asness’s AQR Capital Management.
Seeing as Mitek Systems, Inc. (NASDAQ:MITK) has faced a declination in interest from hedge fund managers, we can see that there is a sect of funds who sold off their positions entirely in Q1. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the largest position of all the hedgies we track, totaling about $0.1 million in stock. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Mitek Systems, Inc. (NASDAQ:MITK)?
Insider purchases made by high-level executives is best served when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, Mitek Systems, Inc. (NASDAQ:MITK) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Mitek Systems, Inc. (NASDAQ:MITK). These stocks are NetSol Technologies Inc. (NASDAQ:NTWK), ARC Document Solutions Inc (NYSE:ARC), PC Tel Inc (NASDAQ:PCTI), FalconStor Software, Inc. (NASDAQ:FALC), and Exa Corp (NASDAQ:EXA). All of these stocks are in the application software industry and their market caps are closest to MITK’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| NetSol Technologies Inc. (NASDAQ:NTWK) | 4 | 2 | 1 |
| ARC Document Solutions Inc (NYSE:ARC) | 12 | 5 | 1 |
| PC Tel Inc (NASDAQ:PCTI) | 5 | 2 | 2 |
| FalconStor Software, Inc. (NASDAQ:FALC) | 4 | 0 | 1 |
| Exa Corp (NASDAQ:EXA) | 5 | 3 |
With the results exhibited by the aforementioned studies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Mitek Systems, Inc. (NASDAQ:MITK) is an important part of this process.
