If a TiVo Inc. (NASDAQ:TIVO) insider is buying, should you follow?
In the eyes of many of your fellow readers, hedge funds are seen as overrated, old investment vehicles of an era lost to time. Although there are more than 8,000 hedge funds with their doors open today, this site aim at the crème de la crème of this club, around 525 funds. It is assumed that this group has its hands on the majority of all hedge funds’ total assets, and by monitoring their highest quality picks, we’ve come up with a number of investment strategies that have historically outstripped the broader indices. 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 started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as necessary, bullish insider trading activity is a second way to look at the financial markets. Just as you’d expect, there are lots of reasons for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this method if piggybackers understand where to look (learn more here).
Now that that’s out of the way, we’re going to analyze the latest info surrounding TiVo Inc. (NASDAQ:TIVO).
What have hedge funds been doing with TiVo Inc. (NASDAQ:TIVO)?
Heading into Q3, a total of 27 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially.
As TiVo Inc. (NASDAQ:TIVO) has witnessed declining interest from upper-tier hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers who sold off their full holdings heading into Q2. Interestingly, Scott Fine and Peter Richards’s Empire Capital Management sold off the biggest stake of the 450+ funds we watch, comprising about $45.5 million in stock. Mark Kingdon’s fund, Kingdon Capital, also said goodbye to its stock, about $23.5 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading TiVo Inc. (NASDAQ:TIVO)?
Insider buying made by high-level executives is most useful when the company in focus has experienced transactions within the past 180 days. Over the last six-month time period, TiVo Inc. (NASDAQ:TIVO) has experienced 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to TiVo Inc. (NASDAQ:TIVO). These stocks are Charter Communications, Inc. (NASDAQ:CHTR), Net Servicos de Comunicacao SA (ADR) (NASDAQ:NETC), AMC Networks Inc (NASDAQ:AMCX), Cablevision Systems Corporation (NYSE:CVC), and Crown Media Holdings, Inc (NASDAQ:CRWN). This group of stocks are the members of the catv systems industry and their market caps resemble TIVO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Charter Communications, Inc. (NASDAQ:CHTR) | 58 | 1 | 13 |
| Net Servicos de Comunicacao SA (ADR) (NASDAQ:NETC) | 0 | 0 | |
| AMC Networks Inc (NASDAQ:AMCX) | 31 | 0 | 4 |
| Cablevision Systems Corporation (NYSE:CVC) | 31 | 0 | 1 |
| Crown Media Holdings, Inc (NASDAQ:CRWN) | 4 | 1 | 0 |
Using the returns explained by our analyses, average investors must always keep one eye on hedge fund and insider trading activity, and TiVo Inc. (NASDAQ:TIVO) is an important part of this process.
