Ellie Mae Inc (ELLI): Insiders and Hedge Funds Aren’t Crazy About It
Should Ellie Mae Inc (NYSE:ELLI) investors track the following data?
To many of your fellow readers, hedge funds are perceived as useless, old financial vehicles of an era lost to time. Although there are over 8,000 hedge funds in operation currently, Insider Monkey focuses on the masters of this group, close to 525 funds. It is assumed that this group oversees most of the smart money's total capital, and by paying attention to their highest performing investments, we've identified a few investment strategies that have historically outstripped the broader indices. 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 33 percentage points in 11 months (find the details here).
Just as key, bullish insider trading sentiment is a second way to look at the financial markets. Obviously, there are a number of motivations for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the impressive potential of this strategy if piggybackers know what to do (learn more here).
Thus, let's examine the latest info surrounding Ellie Mae Inc (NYSE:ELLI).
What does the smart money think about Ellie Mae Inc (NYSE:ELLI)?
At Q2's end, a total of 17 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially.
Out of the hedge funds we follow, Tremblant Capital, managed by Brett Barakett, holds the most valuable position in Ellie Mae Inc (NYSE:ELLI). Tremblant Capital has a $37.5 million position in the stock, comprising 1.8% of its 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $21.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include Spencer M. Waxman's Shannon River Fund Management, Philip Hempleman's Ardsley Partners and Jim Simons's Renaissance Technologies.
Because Ellie Mae Inc (NYSE:ELLI) has witnessed declining interest from upper-tier hedge fund managers, it's easy to see that there were a few money managers who sold off their full holdings heading into Q2. It's worth mentioning that Joseph A. Jolson's Harvest Capital Strategies cut the largest stake of all the hedgies we key on, worth close to $6.5 million in stock, and Scott Burney of Bluefin Investment Management was right behind this move, as the fund dumped about $5.2 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Ellie Mae Inc (NYSE:ELLI)?
Bullish insider trading is best served when the company in question has seen transactions within the past half-year. Over the latest half-year time period, Ellie Mae Inc (NYSE:ELLI) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to Ellie Mae Inc (NYSE:ELLI). These stocks are BroadSoft Inc (NASDAQ:BSFT), SciQuest, Inc. (NASDAQ:SQI), Accelrys, Inc. (NASDAQ:ACCL), Proofpoint Inc (NASDAQ:PFPT), and SPS Commerce, Inc. (NASDAQ:SPSC). This group of stocks are the members of the application software industry and their market caps are similar to ELLI's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
BroadSoft Inc (NASDAQ:BSFT)
SciQuest, Inc. (NASDAQ:SQI)
Accelrys, Inc. (NASDAQ:ACCL)
Proofpoint Inc (NASDAQ:PFPT)
SPS Commerce, Inc. (NASDAQ:SPSC)
Using the results demonstrated by the previously mentioned research, average investors should always watch hedge fund and insider trading activity, and Ellie Mae Inc (NYSE:ELLI) shareholders fit into this picture quite nicely.