Freescale Semiconductor Ltd (FSL): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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Is Freescale Semiconductor Ltd (NYSE:FSL) a buy right now? The best stock pickers are in a bullish mood. The number of bullish hedge fund positions advanced by 9 in recent months.

Freescale Semiconductor Ltd (NYSE:FSL)

To most market participants, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are over 8000 funds in operation at the moment, we at Insider Monkey hone in on the elite of this group, about 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by tracking their best picks, we have uncovered a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as beneficial, positive insider trading activity is another way to parse down the stock market universe. Just as you’d expect, there are a variety of stimuli for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

Consequently, it’s important to take a gander at the key action surrounding Freescale Semiconductor Ltd (NYSE:FSL).

Hedge fund activity in Freescale Semiconductor Ltd (NYSE:FSL)

At Q1′s end, a total of 18 of the hedge funds we track held long positions in this stock, a change of 100% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes considerably.

Of the funds we track, Criterion Capital, managed by Christopher Lord, holds the largest position in Freescale Semiconductor Ltd (NYSE:FSL). Criterion Capital has a $62.6 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $54.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Douglas Dillard Jr. and Raj D. Venkatesan’s Standard Pacific Capital, Matthew Knauer and Mina Faltas’s Nokota Management and SAC Subsidiary’s Sigma Capital Management.

As aggregate interest increased, some big names have been driving this bullishness. Standard Pacific Capital, managed by Douglas Dillard Jr. and Raj D. Venkatesan, established the most outsized position in Freescale Semiconductor Ltd (NYSE:FSL). Standard Pacific Capital had 28 million invested in the company at the end of the quarter. SAC Subsidiary’s Sigma Capital Management also initiated a $5.4 million position during the quarter. The other funds with brand new FSL positions are Scott Fine and Peter Richards’s Empire Capital Management, Andrew Sandler’s Sandler Capital Management, and Israel Englander’s Millennium Management.

What have insiders been doing with Freescale Semiconductor Ltd (NYSE:FSL)?

Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time period, Freescale Semiconductor Ltd (NYSE:FSL) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Freescale Semiconductor Ltd (NYSE:FSL). These stocks are STMicroelectronics N.V. (ADR) (NYSE:STM), Mellanox Technologies, Ltd. (NASDAQ:MLNX), Atmel Corporation (NASDAQ:ATML), AU Optronics Corp. (ADR) (NYSE:AUO), and ON Semiconductor Corp (NASDAQ:ONNN). All of these stocks are in the semiconductor – broad line industry and their market caps are closest to FSL’s market cap.

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