This Metric Says You Are Smart to Buy Infosys Ltd ADR (INFY)

Infosys Ltd ADR (NYSE:INFY) was in 14 hedge funds’ portfolio at the end of March. INFY has experienced an increase in support from the world’s most elite money managers recently. There were 11 hedge funds in our database with INFY positions at the end of the previous quarter.

To most investors, hedge funds are assumed to be unimportant, old financial tools of years past. While there are over 8000 funds trading at present, we look at the crème de la crème of this club, close to 450 funds. It is widely believed that this group controls most of the smart money’s total capital, and by tracking their highest performing equity investments, we have unsheathed a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as integral, positive insider trading activity is a second way to parse down the world of equities. Obviously, there are a number of stimuli for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the valuable potential of this method if you understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the latest action regarding Infosys Ltd ADR (NYSE:INFY).

How are hedge funds trading Infosys Ltd ADR (NYSE:INFY)?

Heading into Q2, a total of 14 of the hedge funds we track were long in this stock, a change of 27% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.

According to our comprehensive database, Polaris Capital Management, managed by Bernard Horn, holds the most valuable position in Infosys Ltd ADR (NYSE:INFY). Polaris Capital Management has a $95 million position in the stock, comprising 5.6% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $55 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jim Simons’s Renaissance Technologies and Robert B. Gillam’s McKinley Capital Management.

As industrywide interest jumped, key money managers have jumped into Infosys Ltd ADR (NYSE:INFY) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most valuable position in Infosys Ltd ADR (NYSE:INFY). Arrowstreet Capital had 41.9 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $38.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert B. Gillam’s McKinley Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Richard Driehaus’s Driehaus Capital.

How have insiders been trading Infosys Ltd ADR (NYSE:INFY)?

Insider buying is best served when the company in question has experienced transactions within the past six months. Over the latest six-month time period, Infosys Ltd ADR (NYSE:INFY) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Infosys Ltd ADR (NYSE:INFY). These stocks are Concur Technologies, Inc. (NASDAQ:CNQR), National Instruments Corp (NASDAQ:NATI), ANSYS, Inc. (NASDAQ:ANSS), Autodesk, Inc. (NASDAQ:ADSK), and VMware, Inc. (NYSE:VMW). This group of stocks are the members of the technical & system software industry and their market caps resemble INFY’s market cap.

With the returns shown by our tactics, everyday investors should always monitor hedge fund and insider trading sentiment, and Infosys Ltd ADR (NYSE:INFY) shareholders fit into this picture quite nicely.

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