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3D Systems Corporation (DDD): One Can’t-Miss Confidence Indicator

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Is 3D Systems Corporation (NYSE:DDD) a buy, sell, or hold? The smart money is becoming more confident. The number of long hedge fund bets improved by one recently. This is worth noting because on the whole, 3D Systems has disappointed in 2013, just one year after it single-handedly carried many of its investors’ portfolios.

If you’d ask most stock holders, hedge funds are viewed as underperforming, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, we choose to focus on the elite of this group, about 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their top investments, we have spotted a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 24 percentage points in 7 months (check out a sample of our picks).

3D Systems Corporation (NYSE:DDD)

Just as beneficial, bullish insider trading sentiment is another way to parse down the financial markets. Just as you’d expect, there are a variety of reasons for an insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Many empirical studies have demonstrated the valuable potential of this tactic if investors understand what to do (learn more here).

With these “truths” under our belt, we’re going to take a gander at the latest action surrounding 3D Systems Corporation (NYSE:DDD).

What does the smart money think about 3D Systems Corporation (NYSE:DDD)?

At the end of the fourth quarter, a total of 8 of the hedge funds we track were bullish in this stock, a change of 14% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies we track, Chase Coleman and Feroz Dewan’s Tiger Global Management LLC had the biggest position in 3D Systems Corporation (NYSE:DDD), worth close to $55 million, comprising 1% of its total 13F portfolio. On Tiger Global Management LLC’s heels is Christopher Lord of Criterion Capital, with a $11 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Ken Griffin’s Citadel Investment Group, and Daniel S. Och’s OZ Management.

Now, key hedge funds were breaking ground themselves. Criterion Capital, managed by Christopher Lord, assembled the biggest position in 3D Systems Corporation (NYSE:DDD). Criterion Capital had 11 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also made a $2 million investment in the stock during the quarter. The other funds with brand new DDD positions are Glenn Russell Dubin’s Highbridge Capital Management and Ryan Frick and Oliver Evans’s Dorsal Capital Management.

What do corporate executives and insiders think about 3D Systems Corporation (NYSE:DDD)?

Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past 180 days. Over the last half-year time period, 3D Systems Corporation (NYSE:DDD) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to 3D Systems Corporation (NYSE:DDD). These stocks are Babcock & Wilcox Co (NYSE:BWC), Crane Co. (NYSE:CR), Lennox International Inc. (NYSE:LII), Sauer-Danfoss Inc. (NYSE:SHS), and The Middleby Corporation (NASDAQ:MIDD). This group of stocks are in the diversified machinery industry and their market caps match DDD’s market cap.

The appropriate table is on Page 2.

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