Safeguard Scientifics, Inc (NYSE:SFE) has experienced an increase in hedge fund sentiment lately.
According to most traders, hedge funds are assumed to be underperforming, outdated financial vehicles of years past. While there are more than 8000 funds in operation today, we at Insider Monkey hone in on the elite of this club, close to 450 funds. It is widely believed that this group oversees the lion's share of all hedge funds' total asset base, and by tracking their top stock picks, we have figured out a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as key, positive insider trading activity is another way to parse down the investments you're interested in. Just as you'd expect, there are many motivations for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this strategy if "monkeys" know where to look (learn more here).
Now, let's take a gander at the latest action regarding Safeguard Scientifics, Inc (NYSE:SFE).
At the end of the first quarter, a total of 8 of the hedge funds we track were long in this stock, a change of 33% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly.
Of the funds we track, Whitebox Advisors, managed by Andy Redleaf, holds the most valuable position in Safeguard Scientifics, Inc (NYSE:SFE). Whitebox Advisors has a $2.3 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk of GRT Capital Partners, with a $2.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Michael Price's MFP Investors, Ken Griffin's Citadel Investment Group and John Overdeck and David Siegel's Two Sigma Advisors.
As one would reasonably expect, some big names were leading the bulls' herd. D E Shaw, managed by D. E. Shaw, assembled the most outsized position in Safeguard Scientifics, Inc (NYSE:SFE). D E Shaw had 0.2 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also made a $0.2 million investment in the stock during the quarter.
Insider buying is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time period, Safeguard Scientifics, Inc (NYSE:SFE) has seen 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's check out hedge fund and insider activity in other stocks similar to Safeguard Scientifics, Inc (NYSE:SFE). These stocks are Carbonite Inc (NASDAQ:CARB), Consolidated Graphics, Inc. (NYSE:CGX), Furiex Pharmaceuticals Inc (NASDAQ:FURX), CBIZ, Inc. (NYSE:CBZ), and Net 1 UEPS Technologies Inc (NASDAQ:UEPS). This group of stocks are the members of the business services industry and their market caps resemble SFE's market cap.