Vringo, Inc. (VRNG), DTS Inc. (DTSI): Hedge Funds Are Buying Actuate Corporation (BIRT)

Actuate Corporation (NASDAQ:BIRT) has experienced an increase in hedge fund sentiment in recent months.

To most shareholders, hedge funds are viewed as slow, old investment tools of years past. While there are over 8000 funds in operation at the moment, we look at the aristocrats of this group, close to 450 funds. It is estimated that this group has its hands on the lion’s share of the smart money’s total capital, and by tracking their highest performing equity investments, we have deciphered a few investment strategies that have historically outpaced the market. 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 began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as key, positive insider trading sentiment is a second way to break down the investments you’re interested in. Obviously, there are lots of stimuli for a bullish insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if investors know where to look (learn more here).

Now, it’s important to take a look at the recent action regarding Actuate Corporation (NASDAQ:BIRT).

How have hedgies been trading Actuate Corporation (NASDAQ:BIRT)?

Heading into 2013, a total of 14 of the hedge funds we track held long positions in this stock, a change of 27% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially.

According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Actuate Corporation (NASDAQ:BIRT). Renaissance Technologies has a $9.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $8.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Cliff Asness’s AQR Capital Management, Robert B. Gillam’s McKinley Capital Management and D. E. Shaw’s D E Shaw.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Dialectic Capital Management, managed by John Fichthorn, created the biggest position in Actuate Corporation (NASDAQ:BIRT). Dialectic Capital Management had 1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are J. Carlo Cannell’s Cannell Capital and Paul Tudor Jones’s Tudor Investment Corp.

How are insiders trading Actuate Corporation (NASDAQ:BIRT)?

Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past six months. Over the last half-year time period, Actuate Corporation (NASDAQ:BIRT) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Actuate Corporation (NASDAQ:BIRT). These stocks are Active Network Inc (NYSE:ACTV), Vringo, Inc. (NYSEAMEX:VRNG), DTS Inc. (NASDAQ:DTSI), RealNetworks Inc (NASDAQ:RNWK), and Guidance Software, Inc. (NASDAQ:GUID). This group of stocks belong to the application software industry and their market caps match BIRT’s market cap.

With the results shown by the aforementioned strategies, retail investors should always watch hedge fund and insider trading sentiment, and Actuate Corporation (NASDAQ:BIRT) applies perfectly to this mantra.

Click here to learn why you should track hedge funds