Is RealNetworks Inc (RNWK) Going to Burn These Hedge Funds?

RealNetworks Inc (NASDAQ:RNWK) investors should be aware of an increase in hedge fund sentiment in recent months.

According to most shareholders, hedge funds are viewed as underperforming, outdated investment vehicles of years past. While there are more than 8000 funds in operation at the moment, we hone in on the leaders of this club, about 450 funds. It is estimated that this group controls most of the hedge fund industry’s total capital, and by monitoring their highest performing equity investments, we have unearthed a few investment strategies that have historically outstripped 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 outclassed 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 a second way to break down the world of equities. There are many stimuli for an insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this method if you know where to look (learn more here).

With all of this in mind, we’re going to take a look at the latest action encompassing RealNetworks Inc (NASDAQ:RNWK).

How are hedge funds trading RealNetworks Inc (NASDAQ:RNWK)?

At Q1’s end, a total of 8 of the hedge funds we track held long positions in this stock, a change of 14% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially.

According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in RealNetworks Inc (NASDAQ:RNWK). Renaissance Technologies has a $3.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is P.A.W. CAPITAL PARTNERS, managed by Peter A. Wright, which held a $3.1 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Other peers that hold long positions include Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management.

Now, key hedge funds have jumped into RealNetworks Inc (NASDAQ:RNWK) headfirst. GRT Capital Partners, managed by Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk, created the largest position in RealNetworks Inc (NASDAQ:RNWK). GRT Capital Partners had 0.1 million invested in the company at the end of the quarter.

What have insiders been doing with RealNetworks Inc (NASDAQ:RNWK)?

Insider buying is best served when the company in focus has experienced transactions within the past six months. Over the latest 180-day time period, RealNetworks Inc (NASDAQ:RNWK) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to RealNetworks Inc (NASDAQ:RNWK). These stocks are DTS Inc. (NASDAQ:DTSI), Active Network Inc (NYSE:ACTV), Actuate Corporation (NASDAQ:BIRT), Vringo, Inc. (NYSEAMEX:VRNG), and Guidance Software, Inc. (NASDAQ:GUID). This group of stocks are in the application software industry and their market caps are closest to RNWK’s market cap.