Do Hedge Funds and Insiders Love Keynote Systems, Inc. (KEYN)?
What's a smart Keynote Systems, Inc. (NASDAQ:KEYN) investor to do?
In the eyes of many of your fellow readers, hedge funds are seen as useless, outdated financial vehicles of a forgotten age. Although there are over 8,000 hedge funds trading today, Insider Monkey aim at the moguls of this group, about 525 funds. It is assumed that this group oversees the lion's share of the hedge fund industry's total capital, and by paying attention to their highest quality investments, we've identified a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 crucial, bullish insider trading activity is another way to look at the stock market universe. Obviously, there are lots of stimuli for an upper level exec to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).
Keeping this in mind, we're going to study the recent info surrounding Keynote Systems, Inc. (NASDAQ:KEYN).
What have hedge funds been doing with Keynote Systems, Inc. (NASDAQ:KEYN)?
In preparation for the third quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 57% from the first quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their stakes substantially.
According to our 13F database, Empire Capital Management, managed by Scott Fine and Peter Richards, holds the largest position in Keynote Systems, Inc. (NASDAQ:KEYN). Empire Capital Management has a $43.5 million position in the stock, comprising 5.2% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons, which held a $10.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Mario Gabelli's GAMCO Investors, Sander Gerber's Hudson Bay Capital Management and Cliff Asness's AQR Capital Management.
As aggregate interest spiked, certain money managers have been driving this bullishness. Empire Capital Management, managed by Scott Fine and Peter Richards, initiated the largest position in Keynote Systems, Inc. (NASDAQ:KEYN). Empire Capital Management had 43.5 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also initiated a $10.2 million position during the quarter. The other funds with brand new KEYN positions are Mario Gabelli's GAMCO Investors, Sander Gerber's Hudson Bay Capital Management, and Cliff Asness's AQR Capital Management.
How have insiders been trading Keynote Systems, Inc. (NASDAQ:KEYN)?
Insider buying is particularly usable when the company in question has experienced transactions within the past half-year. Over the last half-year time period, Keynote Systems, Inc. (NASDAQ:KEYN) has seen 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 Keynote Systems, Inc. (NASDAQ:KEYN). These stocks are ModusLink Global Solutions, Inc. (NASDAQ:MLNK), Support.com, Inc. (NASDAQ:SPRT), Vocus, Inc. (NASDAQ:VOCS), QuinStreet Inc (NASDAQ:QNST), and ClickSoftware Technologies Ltd. (NASDAQ:CKSW). This group of stocks are the members of the internet software & services industry and their market caps are closest to KEYN's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
ModusLink Global Solutions, Inc. (NASDAQ:MLNK)
Support.com, Inc. (NASDAQ:SPRT)
Vocus, Inc. (NASDAQ:VOCS)
QuinStreet Inc (NASDAQ:QNST)
ClickSoftware Technologies Ltd. (NASDAQ:CKSW)
Using the results demonstrated by Insider Monkey's studies, average investors should always watch hedge fund and insider trading activity, and Keynote Systems, Inc. (NASDAQ:KEYN) is an important part of this process.