Should You Buy ValueClick Inc (VCLK)?

ValueClick Inc (NASDAQ:VCLK) investors should pay attention to an increase in hedge fund sentiment in recent months.

In the eyes of most market participants, hedge funds are assumed to be unimportant, old investment tools of yesteryear. While there are more than 8000 funds in operation at present, we choose to focus on the elite of this club, close to 450 funds. It is widely believed that this group oversees most of all hedge funds’ total capital, and by monitoring their top investments, we have unsheathed a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as integral, positive insider trading sentiment is a second way to parse down the financial markets. As the old adage goes: there are a variety of incentives for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this method if shareholders understand what to do (learn more here).

Keeping this in mind, it’s important to take a look at the key action encompassing ValueClick Inc (NASDAQ:VCLK).

Hedge fund activity in ValueClick Inc (NASDAQ:VCLK)

Heading into Q2, a total of 21 of the hedge funds we track held long positions in this stock, a change of 17% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Amy Minella’s Cardinal Capital had the most valuable position in ValueClick Inc (NASDAQ:VCLK), worth close to $60.7 million, accounting for 3.8% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $22.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Jim Simons’s Renaissance Technologies, John Wu’s Sureview Capital and D. E. Shaw’s D E Shaw.

As industrywide interest jumped, key money managers have jumped into ValueClick Inc (NASDAQ:VCLK) headfirst. Renaissance Technologies, managed by Jim Simons, assembled the largest position in ValueClick Inc (NASDAQ:VCLK). Renaissance Technologies had 14.4 million invested in the company at the end of the quarter. John Wu’s Sureview Capital also initiated a $14.1 million position during the quarter. The other funds with new positions in the stock are Robert B. Gillam’s McKinley Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Matthew Tewksbury’s Stevens Capital Management.

How are insiders trading ValueClick Inc (NASDAQ:VCLK)?

Insider purchases made by high-level executives is most useful when the company in question has seen transactions within the past 180 days. Over the latest 180-day time frame, ValueClick Inc (NASDAQ:VCLK) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to ValueClick Inc (NASDAQ:VCLK). These stocks are AOL, Inc. (NYSE:AOL), Youku Tudou Inc (ADR) (NYSE:YOKU), HomeAway, Inc. (NASDAQ:AWAY), Sohu.com Inc (NASDAQ:SOHU), and Zynga Inc (NASDAQ:ZNGA). All of these stocks are in the internet information providers industry and their market caps resemble VCLK’s market cap.