Should You Buy Bankrate Inc (RATE)?

Bankrate Inc (NYSE:RATE) has seen an increase in activity from the world’s largest hedge funds lately.

According to most stock holders, hedge funds are seen as unimportant, outdated investment tools of the past. While there are more than 8000 funds trading today, we at Insider Monkey choose to focus on the bigwigs of this club, around 450 funds. It is widely believed that this group controls the majority of the smart money’s total asset base, and by tracking their highest performing stock picks, we have deciphered a number of investment strategies that have historically outstripped Mr. Market. 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, optimistic insider trading activity is a second way to break down the financial markets. Just as you’d expect, there are plenty of reasons for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the impressive potential of this method if piggybackers understand where to look (learn more here).

Keeping this in mind, we’re going to take a gander at the latest action regarding Bankrate Inc (NYSE:RATE).

How are hedge funds trading Bankrate Inc (NYSE:RATE)?

At Q1’s end, a total of 9 of the hedge funds we track held long positions in this stock, a change of 50% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably.

When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the biggest position in Bankrate Inc (NYSE:RATE), worth close to $38.8 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $23.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include James A. Noonan’s Pivot Point Capital, Matthew Knauer and Mina Faltas’s Nokota Management and George Soros’s Soros Fund Management.

Now, key hedge funds were leading the bulls’ herd. Nokota Management, managed by Matthew Knauer and Mina Faltas, initiated the most outsized position in Bankrate Inc (NYSE:RATE). Nokota Management had 11 million invested in the company at the end of the quarter. George Soros’s Soros Fund Management also made a $6 million investment in the stock during the quarter. The following funds were also among the new RATE investors: Youlia Miteva’s Proxima Capital Management and Israel Englander’s Millennium Management.

How are insiders trading Bankrate Inc (NYSE:RATE)?

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

Let’s go over hedge fund and insider activity in other stocks similar to Bankrate Inc (NYSE:RATE). These stocks are InterXion Holding NV (NYSE:INXN), Shutterfly, Inc. (NASDAQ:SFLY), Kayak Software Corp (NASDAQ:KYAK), Yelp Inc (NYSE:YELP), and OpenTable Inc (NASDAQ:OPEN). This group of stocks are the members of the internet information providers industry and their market caps match RATE’s market cap.

With the results shown by the aforementioned studies, everyday investors must always monitor hedge fund and insider trading sentiment, and Bankrate Inc (NYSE:RATE) is an important part of this process.

Click here to learn why you should track hedge funds