Broadcom Corporation (BRCM): Watch These Two Little-Known Indicators

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Broadcom Corporation (NASDAQ:BRCM) was in 37 hedge funds’ portfolio at the end of December. BRCM has seen an increase in enthusiasm from smart money in recent months. There were 35 hedge funds in our database with BRCM positions at the end of the previous quarter.

If you’d ask most traders, hedge funds are viewed as unimportant, outdated financial vehicles of years past. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the upper echelon of this group, close to 450 funds. Most estimates calculate that this group has its hands on the lion’s share of the smart money’s total capital, and by keeping an eye on their best investments, we have unearthed a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 trumped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Broadcom Corporation (NASDAQ:BRCM)Just as integral, optimistic insider trading sentiment is another way to break down the marketplace. Just as you’d expect, there are lots of reasons for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this strategy if shareholders know what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the key action regarding Broadcom Corporation (NASDAQ:BRCM).

How have hedgies been trading Broadcom Corporation (NASDAQ:BRCM)?

At year’s end, a total of 37 of the hedge funds we track held long positions in this stock, a change of 6% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially.

Of the funds we track, Ken Griffin’s Citadel Investment Group had the biggest position in Broadcom Corporation (NASDAQ:BRCM), worth close to $164.4 million, comprising 0.3% of its total 13F portfolio. Coming in second is David Tepper of Appaloosa Management LP, with a $113.6 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Glenn Russell Dubin’s Highbridge Capital Management, Scott Fine and Peter Richards’s Empire Capital Management and Jim Simons’s Renaissance Technologies.

As one would reasonably expect, key money managers were breaking ground themselves. Highbridge Capital Management, managed by Glenn Russell Dubin, initiated the most valuable position in Broadcom Corporation (NASDAQ:BRCM). Highbridge Capital Management had 61.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $16 million investment in the stock during the quarter. The other funds with brand new BRCM positions are Israel Englander’s Millennium Management, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and John Hurley’s Cavalry Asset Management.

How have insiders been trading Broadcom Corporation (NASDAQ:BRCM)?

Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, Broadcom Corporation (NASDAQ:BRCM) has experienced zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Broadcom Corporation (NASDAQ:BRCM). These stocks are Skyworks Solutions Inc (NASDAQ:SWKS), Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM), Marvell Technology Group Ltd. (NASDAQ:MRVL), Xilinx, Inc. (NASDAQ:XLNX), and Analog Devices, Inc. (NASDAQ:ADI). This group of stocks are the members of the semiconductor – integrated circuits industry and their market caps match BRCM’s market cap.

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