Now, according to many investors, hedge funds are assumed to be overrated, old investment tools of an era lost to time. Although there are over 8,000 hedge funds in operation currently, this site focuses on the masters of this club, close to 525 funds. It is widely held that this group has its hands on most of the hedge fund industry’s total capital, and by paying attention to their highest quality equity investments, we’ve uncovered a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 33 percentage points in 11 months (explore the details and some picks here).
Equally as key, optimistic insider trading activity is another way to analyze the marketplace. Obviously, there are many motivations for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this strategy if “monkeys” understand where to look (learn more here).
Keeping this in mind, we’re going to discuss the recent info surrounding ScanSource, Inc. (NASDAQ:SCSC).
Hedge fund activity in ScanSource, Inc. (NASDAQ:SCSC)
At the end of the second quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 38% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably.
When using filings from the hedgies we track, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC had the biggest position in ScanSource, Inc. (NASDAQ:SCSC), worth close to $51.9 million, comprising 0.6% of its total 13F portfolio. Sitting at the No. 2 spot is Gotham Asset Management, managed by Joel Greenblatt, which held a $3.7 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Neil Chriss’s Hutchin Hill Capital.
Now, particular hedge funds were breaking ground themselves. First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, initiated the most outsized position in ScanSource, Inc. (NASDAQ:SCSC). First Pacific Advisors LLC had 51.9 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $3.7 million investment in the stock during the quarter. The following funds were also among the new SCSC investors: John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management, and Neil Chriss’s Hutchin Hill Capital.
How have insiders been trading ScanSource, Inc. (NASDAQ:SCSC)?
Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, ScanSource, Inc. (NASDAQ:SCSC) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to ScanSource, Inc. (NASDAQ:SCSC). These stocks are Mentor Graphics Corp (NASDAQ:MENT), ACI Worldwide Inc (NASDAQ:ACIW), Tyler Technologies, Inc. (NYSE:TYL), Systemax Inc. (NYSE:SYX), and PDF Solutions, Inc. (NASDAQ:PDFS). This group of stocks are in the technical & system software industry and their market caps resemble SCSC’s market cap.
