Is Applied Micro Circuits Corporation (NASDAQ:AMCC) a sound investment now? Prominent investors are taking a pessimistic view. The number of long hedge fund positions were trimmed by 2 in recent months.
At the moment, there are plenty of metrics market participants can use to watch the equity markets. A duo of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a healthy margin (see just how much).
Just as important, positive insider trading activity is a second way to parse down the investments you're interested in. Obviously, there are a variety of motivations for an executive to sell shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this strategy if investors understand where to look (learn more here).
Keeping this in mind, we're going to take a look at the recent action regarding Applied Micro Circuits Corporation (NASDAQ:AMCC).
In preparation for this year, a total of 7 of the hedge funds we track were long in this stock, a change of -22% from one quarter earlier. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Applied Micro Circuits Corporation (NASDAQ:AMCC). Citadel Investment Group has a $30.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Citadel Investment Group's heels is Empire Capital Management, managed by Scott Fine and Peter Richards, which held a $16.3 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Other peers with similar optimism include Richard Driehaus's Driehaus Capital, Drew Cupps's Cupps Capital Management and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Since Applied Micro Circuits Corporation (NASDAQ:AMCC) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of fund managers that elected to cut their full holdings in Q4. Intriguingly, Jim Simons's Renaissance Technologies cut the biggest stake of the "upper crust" of funds we watch, totaling an estimated $1.3 million in stock., and Noam Gottesman of GLG Partners was right behind this move, as the fund said goodbye to about $0.8 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds in Q4.
Insider buying is most useful when the company we're looking at has experienced transactions within the past half-year. Over the last half-year time frame, Applied Micro Circuits Corporation (NASDAQ:AMCC) has seen 4 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to Applied Micro Circuits Corporation (NASDAQ:AMCC). These stocks are Aeroflex Holding Corp. (NYSE:ARX), Photronics, Inc. (NASDAQ:PLAB), Micrel, Incorporated (NASDAQ:MCRL), Amkor Technology, Inc. (NASDAQ:AMKR), and Exar Corporation (NASDAQ:EXAR). This group of stocks are in the semiconductor - integrated circuits industry and their market caps are similar to AMCC's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Aeroflex Holding Corp. (NYSE:ARX)||7||2||0|
|Photronics, Inc. (NASDAQ:PLAB)||13||0||5|
|Micrel, Incorporated (NASDAQ:MCRL)||6||2||1|
|Amkor Technology, Inc. (NASDAQ:AMKR)||11||0||0|
|Exar Corporation (NASDAQ:EXAR)||10||0||6|
With the results shown by our studies, everyday investors should always pay attention to hedge fund and insider trading activity, and Applied Micro Circuits Corporation (NASDAQ:AMCC) applies perfectly to this mantra.