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Hedge Funds Are Betting On Cree, Inc. (NASDAQ:CREE)

Is Cree, Inc. (NASDAQ:CREE) ready to raly soon? Investors who are in the know are turning bullish. The number of long hedge fund positions improved by 1 in recent months.

Cree, Inc. (NASDAQ:CREE)

According to most stock holders, hedge funds are viewed as slow, old financial vehicles of the past. While there are over 8000 funds trading at present, we choose to focus on the masters of this group, close to 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total capital, and by watching their top investments, we have unsheathed a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year 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 25 percentage points in 6.5 month (explore the details and some picks here).

Just as important, optimistic insider trading activity is another way to break down the world of equities. Obviously, there are a number of incentives for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the useful potential of this method if piggybackers know what to do (learn more here).

With all of this in mind, it’s important to take a glance at the key action encompassing Cree, Inc. (NASDAQ:CREE).

Hedge fund activity in Cree, Inc. (NASDAQ:CREE)

Heading into 2013, a total of 16 of the hedge funds we track were long in this stock, a change of 7% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Donald Chiboucis’s Columbus Circle Investors had the biggest position in Cree, Inc. (NASDAQ:CREE), worth close to $66 million, accounting for 0.5% of its total 13F portfolio. The second largest stake is held by D. E. Shaw of D E Shaw, with a $24 million call position; 0.5% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Jim Simons’s Renaissance Technologies, Chuck Royce’s Royce & Associates and John A. Levin’s Levin Capital Strategies.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Columbus Circle Investors, managed by Donald Chiboucis, assembled the largest position in Cree, Inc. (NASDAQ:CREE). Columbus Circle Investors had 66 million invested in the company at the end of the quarter. Paul Reeder and Edward Shapiro’s PAR Capital Management also initiated a $11 million position during the quarter. The other funds with brand new CREE positions are Jeffrey Vinik’s Vinik Asset Management, Richard Driehaus’s Driehaus Capital, and Drew Cupps’s Cupps Capital Management.

How have insiders been trading Cree, Inc. (NASDAQ:CREE)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past 180 days. Over the last 180-day time period, Cree, Inc. (NASDAQ:CREE) has seen 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned studies, retail investors must always keep an eye on hedge fund and insider trading activity, and Cree, Inc. (NASDAQ:CREE) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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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