Do Hedge Funds and Insiders Love OSI Systems, Inc. (NASDAQ:OSIS)?

OSI Systems, Inc. (NASDAQ:OSIS) was in 17 hedge funds’ portfolio at the end of December. OSIS shareholders have witnessed an increase in enthusiasm from smart money lately. There were 13 hedge funds in our database with OSIS positions at the end of the previous quarter.

OSI Systems Inc. (NASDAQ:OSIS)According to most traders, hedge funds are seen as unimportant, old financial vehicles of the past. While there are greater than 8000 funds with their doors open at present, we hone in on the moguls of this club, about 450 funds. Most estimates calculate that this group oversees the majority of the smart money’s total asset base, and by monitoring their top investments, we have brought to light a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 25 percentage points in 6.5 month (see the details here).

Just as integral, optimistic insider trading sentiment is another way to parse down the stock market universe. Obviously, there are a variety of motivations for an executive to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if investors know where to look (learn more here).

With these “truths” under our belt, we’re going to take a peek at the recent action regarding OSI Systems, Inc. (NASDAQ:OSIS).

How have hedgies been trading OSI Systems, Inc. (NASDAQ:OSIS)?

At year’s end, a total of 17 of the hedge funds we track were bullish in this stock, a change of 31% from one quarter earlier. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes substantially.

According to our comprehensive database, Donald Chiboucis’s Columbus Circle Investors had the biggest position in OSI Systems, Inc. (NASDAQ:OSIS), worth close to $24 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Malcolm Fairbairn of Ascend Capital, with a $13 million position; 0.7% of its 13F portfolio is allocated to the company. Other peers that are bullish include Jim Simons’s Renaissance Technologies, Ken Fisher’s Fisher Asset Management and Scott Burney’s Bluefin Investment Management.

Consequently, key hedge funds have jumped into OSI Systems, Inc. (NASDAQ:OSIS) headfirst. Manatuck Hill Partners, managed by Mark Broach, assembled the most valuable position in OSI Systems, Inc. (NASDAQ:OSIS). Manatuck Hill Partners had 5 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $3 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, John Zaro’s Bourgeon Capital, and Israel Englander’s Millennium Management.

How have insiders been trading OSI Systems, Inc. (NASDAQ:OSIS)?

Insider purchases made by high-level executives is most useful when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, OSI Systems, Inc. (NASDAQ:OSIS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to OSI Systems, Inc. (NASDAQ:OSIS). These stocks are Altra Holdings, Inc. (NASDAQ:AIMC), General Cable Corporation (NYSE:BGC), Franklin Electric Co. (NASDAQ:FELE), GrafTech International Ltd (NYSE:GTI), and Littelfuse, Inc. (NASDAQ:LFUS). This group of stocks belong to the industrial electrical equipment industry and their market caps are closest to OSIS’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Altra Holdings, Inc. (NASDAQ:AIMC) 9 0 3
General Cable Corporation (NYSE:BGC) 20 0 4
Franklin Electric Co. (NASDAQ:FELE) 7 0 5
GrafTech International Ltd (NYSE:GTI) 21 2 2
Littelfuse, Inc. (NASDAQ:LFUS) 9 0 3

With the returns shown by our strategies, retail investors should always monitor hedge fund and insider trading activity, and OSI Systems, Inc. (NASDAQ:OSIS) is no exception.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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