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Cognex Corporation (CGNX): Insiders Aren’t Crazy About It

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Cognex Corporation (NASDAQ:CGNX) was in 7 hedge funds’ portfolio at the end of December. CGNX investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 7 hedge funds in our database with CGNX holdings at the end of the previous quarter.

Cognex Corporation (NASDAQ:CGNX)

According to most investors, hedge funds are perceived as worthless, outdated financial tools of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey hone in on the masters of this club, around 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total capital, and by tracking their top stock picks, we have found a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as integral, positive insider trading sentiment is a second way to break down the financial markets. Obviously, there are many stimuli for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this tactic if you understand what to do (learn more here).

Consequently, we’re going to take a look at the latest action surrounding Cognex Corporation (NASDAQ:CGNX).

How have hedgies been trading Cognex Corporation (NASDAQ:CGNX)?

In preparation for this year, a total of 7 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Chuck Royce’s Royce & Associates had the largest position in Cognex Corporation (NASDAQ:CGNX), worth close to $170.3 million, accounting for 0.6% of its total 13F portfolio. On Royce & Associates’s heels is Invicta Capital Management, managed by Gregory A. Weaver, which held a $11 million position; the fund has 4.9% of its 13F portfolio invested in the stock. Other peers that hold long positions include Andrew Sandler’s Sandler Capital Management, Joel Greenblatt’s Gotham Asset Management and Cliff Asness’s AQR Capital Management.

Seeing as Cognex Corporation (NASDAQ:CGNX) has witnessed a declination in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers who sold off their positions entirely in Q4. Interestingly, D. E. Shaw’s D E Shaw sold off the largest position of the “upper crust” of funds we monitor, valued at about $1.1 million in stock., and Ben Levine, Andrew Manuel and Stefan Renold of LMR Partners was right behind this move, as the fund dumped about $0.3 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Cognex Corporation (NASDAQ:CGNX)?

Bullish insider trading is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest six-month time period, Cognex Corporation (NASDAQ:CGNX) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Cognex Corporation (NASDAQ:CGNX). These stocks are Coherent, Inc. (NASDAQ:COHR), Geospace Technologies Corp (NASDAQ:GEOS), Ixia (NASDAQ:XXIA), Curtiss-Wright Corp. (NYSE:CW), and Itron, Inc. (NASDAQ:ITRI). This group of stocks belong to the scientific & technical instruments industry and their market caps resemble CGNX’s market cap.

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