This Metric Says You Are Smart to Buy SciQuest, Inc. (SQI)
Is it smart to be bullish on SciQuest, Inc. (NASDAQ:SQI)?
To many traders, hedge funds are perceived as bloated, outdated investment tools of a period lost to current times. Although there are over 8,000 hedge funds trading currently, Insider Monkey focuses on the aristocrats of this group, close to 525 funds. It is widely held that this group has its hands on the majority of the smart money's total capital, and by watching their highest quality investments, we've discovered a few investment strategies that have historically outpaced the broader indices. 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 outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as key, positive insider trading sentiment is a second way to analyze the stock market universe. As the old adage goes: there are a number of incentives for an insider to drop shares of his or her company, but only one, very clear reason why they would buy. Many academic studies have demonstrated the useful potential of this method if "monkeys" know what to do (learn more here).
Now that that's out of the way, it's important to discuss the recent info about SciQuest, Inc. (NASDAQ:SQI).
How have hedgies been trading SciQuest, Inc. (NASDAQ:SQI)?
At Q2's end, a total of 8 of the hedge funds we track were bullish in this stock, a change of 14% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings considerably.
Out of the hedge funds we follow, Royce & Associates, managed by Chuck Royce, holds the largest position in SciQuest, Inc. (NASDAQ:SQI). Royce & Associates has a $13.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $11.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Brian Ashford-Russell and Tim Woolley's Polar Capital, Richard Driehaus's Driehaus Capital and Panayotis Sparaggis's Alkeon Capital Management.
As aggregate interest spiked, particular hedge funds have jumped into SciQuest, Inc. (NASDAQ:SQI) headfirst. Royce & Associates, managed by Chuck Royce, established the biggest position in SciQuest, Inc. (NASDAQ:SQI). Royce & Associates had 13.9 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also made a $11.1 million investment in the stock during the quarter. The other funds with brand new SQI positions are Brian Ashford-Russell and Tim Woolley's Polar Capital, Richard Driehaus's Driehaus Capital, and Panayotis æTakisÆ Sparaggis's Alkeon Capital Management.
Insider trading activity in SciQuest, Inc. (NASDAQ:SQI)
Bullish insider trading is particularly usable when the company in focus has seen transactions within the past six months. Over the latest six-month time period, SciQuest, Inc. (NASDAQ:SQI) 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 SciQuest, Inc. (NASDAQ:SQI). These stocks are E2open Inc (NASDAQ:EOPN), AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP), Proofpoint Inc (NASDAQ:PFPT), Bazaarvoice Inc (NASDAQ:BV), and Accelrys, Inc. (NASDAQ:ACCL). All of these stocks are in the application software industry and their market caps are similar to SQI's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
E2open Inc (NASDAQ:EOPN)
AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP)
Proofpoint Inc (NASDAQ:PFPT)
Bazaarvoice Inc (NASDAQ:BV)
Accelrys, Inc. (NASDAQ:ACCL)
Using the returns demonstrated by the previously mentioned tactics, regular investors should always pay attention to hedge fund and insider trading activity, and SciQuest, Inc. (NASDAQ:SQI) is no exception.