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Do Hedge Funds and Insiders Love International Rectifier Corporation (IRF)?

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International Rectifier Corporation (NYSE:IRF) has seen a decrease in enthusiasm from smart money lately.

To most traders, hedge funds are perceived as worthless, old financial vehicles of years past. While there are more than 8000 funds in operation at present, we choose to focus on the aristocrats of this club, close to 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by tracking their best picks, we have come up with a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, bullish insider trading sentiment is a second way to parse down the stock market universe. There are many motivations for an executive to get rid of 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 shareholders understand where to look (learn more here).

Now, let’s take a peek at the latest action regarding International Rectifier Corporation (NYSE:IRF).

How have hedgies been trading International Rectifier Corporation (NYSE:IRF)?

At the end of the first quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of -14% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly.

International Rectifier Corporation (NYSE:IRF)According to our comprehensive database, Chuck Royce’s Royce & Associates had the biggest position in International Rectifier Corporation (NYSE:IRF), worth close to $110.1 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Scott Fine and Peter Richards of Empire Capital Management, with a $4.8 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other peers that are bullish include Joshua Berkowitz’s Woodbine Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group.

Judging by the fact that International Rectifier Corporation (NYSE:IRF) has experienced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedgies that slashed their positions entirely heading into Q2. At the top of the heap, Jeffrey Smith’s Starboard Value LP cut the biggest position of the 450+ funds we watch, totaling close to $8.4 million in stock.. Mike Vranos’s fund, Ellington, also cut its stock, about $0.9 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds heading into Q2.

Insider trading activity in International Rectifier Corporation (NYSE:IRF)

Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past six months. Over the last six-month time frame, International Rectifier Corporation (NYSE:IRF) has experienced 1 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 International Rectifier Corporation (NYSE:IRF). These stocks are Fairchild Semiconductor Intl Inc (NYSE:FCS), Power Integrations Inc (NASDAQ:POWI), PMC-Sierra Inc (NASDAQ:PMCS), and RF Micro Devices, Inc. (NASDAQ:RFMD). This group of stocks belong to the semiconductor – integrated circuits industry and their market caps are closest to IRF’s market cap.

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