LivePerson, Inc. (LPSN): Insiders Aren’t Crazy About It

LivePerson, Inc. (NASDAQ:LPSN) has seen an increase in activity from the world’s largest hedge funds in recent months.

In the eyes of most market participants, hedge funds are seen as unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey look at the elite of this club, around 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their top investments, we have discovered a few investment strategies that have historically outstripped 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 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 integral, positive insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are a number of reasons for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).

Consequently, it’s important to take a glance at the latest action surrounding LivePerson, Inc. (NASDAQ:LPSN).

How are hedge funds trading LivePerson, Inc. (NASDAQ:LPSN)?

Heading into 2013, a total of 8 of the hedge funds we track were bullish in this stock, a change of 33% from the third quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Ken Griffin’s Citadel Investment Group had the largest position in LivePerson, Inc. (NASDAQ:LPSN), worth close to $5 million, comprising less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Jim Simons of Renaissance Technologies, with a $2.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Israel Englander’s Millennium Management, Drew Cupps’s Cupps Capital Management and Richard Driehaus’s Driehaus Capital.

Consequently, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in LivePerson, Inc. (NASDAQ:LPSN). Citadel Investment Group had 5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2.1 million position during the quarter. The only other fund with a new position in the stock is Steven Cohen’s SAC Capital Advisors.

Insider trading activity in LivePerson, Inc. (NASDAQ:LPSN)

Insider trading activity, especially when it’s bullish, is most useful when the company in focus has seen transactions within the past half-year. Over the latest six-month time frame, LivePerson, Inc. (NASDAQ:LPSN) has seen zero unique insiders buying, 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 LivePerson, Inc. (NASDAQ:LPSN). These stocks are Team, Inc. (NYSE:TISI), RPX Corp (NASDAQ:RPXC), Insperity Inc (NYSE:NSP), WNS (Holdings) Limited (ADR) (NYSE:WNS), and InnerWorkings, Inc. (NASDAQ:INWK). This group of stocks belong to the business services industry and their market caps match LPSN’s market cap.

With the results shown by the aforementioned tactics, everyday investors must always watch hedge fund and insider trading sentiment, and LivePerson, Inc. (NASDAQ:LPSN) is an important part of this process.

Click here to learn why you should track hedge funds