Do Hedge Funds and Insiders Love Fusion-IO, Inc. (NYSE:FIO)?

Fusion-IO, Inc. (NYSE:FIO)

Fusion-IO, Inc. (NYSE:FIO) was in 20 hedge funds’ portfolio at the end of the fourth quarter of 2012. FIO has experienced a decrease in enthusiasm from smart money lately. There were 20 hedge funds in our database with FIO holdings at the end of theprevious quarter.

In the eyes of most shareholders, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the masters of this club, around 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by watching their best stock picks, we have unsheathed a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped 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 outpaced the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Just as important, bullish insider trading activity is a second way to break down the marketplace. As the old adage goes: there are a number of motivations for a bullish insider to sell 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 tactic if you understand where to look (learn more here).

Consequently, we’re going to take a glance at the latest action surrounding Fusion-IO, Inc. (NYSE:FIO).

How have hedgies been trading Fusion-IO, Inc. (NYSE:FIO)?

Heading into 2013, a total of 20 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Columbus Circle Investors, managed by Donald Chiboucis, holds the largest position in Fusion-IO, Inc. (NYSE:FIO). Columbus Circle Investors has a $66 million position in the stock, comprising 0.5% of its 13F portfolio. On Columbus Circle Investors’s heels is David Tepper of Appaloosa Management LP, with a $32 million position; 1.1% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Stuart Peterson’s Artis Capital Management, Drew Cupps’s Cupps Capital Management and Steven Cohen’s SAC Capital Advisors.

Seeing as Fusion-IO, Inc. (NYSE:FIO) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few fund managers that elected to cut their entire stakes last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management cut the largest position of all the hedgies we watch, comprising close to $11 million in stock.. Eric Bannasch’s fund, Cadian Capital, also dropped its stock, about $10 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Fusion-IO, Inc. (NYSE:FIO)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past six months. Over the latest 180-day time period, Fusion-IO, Inc. (NYSE:FIO) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

With the results demonstrated by our studies, everyday investors should always monitor hedge fund and insider trading activity, and Fusion-IO, Inc. (NYSE:FIO) shareholders fit into this picture quite nicely.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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