Is Diodes Incorporated (NASDAQ:DIOD) a great investment now? The best stock pickers are turning bullish. The number of bullish hedge fund bets went up by 2 recently.
In the eyes of most shareholders, hedge funds are perceived as worthless, old 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 aristocrats of this club, around 450 funds. It is widely believed that this group oversees the lion’s share of the smart money’s total asset base, and by keeping an eye on their top picks, we have unsheathed a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as integral, positive insider trading activity is another way to parse down the financial markets. There are lots of stimuli for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the market-beating potential of this method if investors understand where to look (learn more here).
Consequently, we’re going to take a gander at the recent action surrounding Diodes Incorporated (NASDAQ:DIOD).
What have hedge funds been doing with Diodes Incorporated (NASDAQ:DIOD)?
At the end of the fourth quarter, a total of 7 of the hedge funds we track were bullish in this stock, a change of 40% from the third quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably.
Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Diodes Incorporated (NASDAQ:DIOD), worth close to $31.7 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Richard S. Pzena of Pzena Investment Management, with a $27.1 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Ken Griffin’s Citadel Investment Group, Mike Vranos’s Ellington and John Overdeck and David Siegel’s Two Sigma Advisors.
As industrywide interest jumped, some big names were breaking ground themselves. Ellington, managed by Mike Vranos, initiated the largest position in Diodes Incorporated (NASDAQ:DIOD). Ellington had 0.6 million invested in the company at the end of the quarter. Andy Redleaf’s Whitebox Advisors also made a $0.3 million investment in the stock during the quarter.
What have insiders been doing with Diodes Incorporated (NASDAQ:DIOD)?
Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past half-year. Over the latest half-year time period, Diodes Incorporated (NASDAQ:DIOD) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Diodes Incorporated (NASDAQ:DIOD). These stocks are Cabot Microelectronics Corporation (NASDAQ:CCMP), TriQuint Semiconductor (NASDAQ:TQNT), QLogic Corporation (NASDAQ:QLGC), InvenSense Inc (NYSE:INVN), and MEMC Electronic Materials, Inc. (NYSE:WFR). This group of stocks are in the semiconductor – integrated circuits industry and their market caps match DIOD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Cabot Microelectronics Corporation (NASDAQ:CCMP) | 5 | 0 | 13 |
| TriQuint Semiconductor (NASDAQ:TQNT) | 12 | 5 | 1 |
| QLogic Corporation (NASDAQ:QLGC) | 14 | 0 | 1 |
| InvenSense Inc (NYSE:INVN) | 11 | 0 | 6 |
| MEMC Electronic Materials, Inc. (NYSE:WFR) | 16 | 3 | 0 |
With the results exhibited by the aforementioned tactics, everyday investors should always monitor hedge fund and insider trading activity, and Diodes Incorporated (NASDAQ:DIOD) applies perfectly to this mantra.
