Is EZchip Semiconductor Ltd. (NASDAQ:EZCH) a safe investment right now? Prominent investors are getting less optimistic. The number of bullish hedge fund bets were cut by 4 lately.
In the eyes of most shareholders, hedge funds are viewed as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the aristocrats of this club, close to 450 funds. It is widely believed that this group controls most of the smart money’s total capital, and by paying attention to their top equity investments, we have spotted a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as beneficial, positive insider trading activity is a second way to parse down the marketplace. Obviously, there are a number of incentives for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Many academic studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).
Consequently, let’s take a glance at the latest action surrounding EZchip Semiconductor Ltd. (NASDAQ:EZCH).
What does the smart money think about EZchip Semiconductor Ltd. (NASDAQ:EZCH)?
Heading into Q2, a total of 5 of the hedge funds we track were bullish in this stock, a change of -44% from the previous quarter. With the smart money’s 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, Dorsal Capital Management, managed by Ryan Frick and Oliver Evans, holds the biggest position in EZchip Semiconductor Ltd. (NASDAQ:EZCH). Dorsal Capital Management has a $27.7 million position in the stock, comprising 3.8% of its 13F portfolio. On Dorsal Capital Management’s heels is SG Capital Management, managed by Ken Grossman and Glen Schneider, which held a $5.1 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Matthew Hulsizer’s PEAK6 Capital Management, and D. E. Shaw’s D E Shaw.
Because EZchip Semiconductor Ltd. (NASDAQ:EZCH) has experienced declining sentiment from the smart money, it’s easy to see that there exists a select few hedgies who were dropping their entire stakes heading into Q2. At the top of the heap, Donald Chiboucis’s Columbus Circle Investors said goodbye to the biggest investment of all the hedgies we track, comprising an estimated $33.3 million in stock., and Josh Resnick of Jericho Capital Asset Management was right behind this move, as the fund cut about $17.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 4 funds heading into Q2.
How are insiders trading EZchip Semiconductor Ltd. (NASDAQ:EZCH)?
Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, EZchip Semiconductor Ltd. (NASDAQ:EZCH) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to EZchip Semiconductor Ltd. (NASDAQ:EZCH). These stocks are Cabot Microelectronics Corporation (NASDAQ:CCMP), Amkor Technology, Inc. (NASDAQ:AMKR), Micrel, Incorporated (NASDAQ:MCRL), OmniVision Technologies, Inc. (NASDAQ:OVTI), and Aeroflex Holding Corp. (NYSE:ARX). This group of stocks are the members of the semiconductor – integrated circuits industry and their market caps are closest to EZCH’s market cap.