At the moment, there are dozens of metrics investors can use to track publicly traded companies. A couple of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform the S&P 500 by a superb margin (see just how much).
Just as useful, optimistic insider trading activity is a second way to analyze the world of equities. As the old adage goes: there are a number of incentives for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this method if shareholders know where to look (learn more here).
Now that that’s out of the way, let’s analyze the recent info for Cavium Inc (NASDAQ:CAVM).
What have hedge funds been doing with Cavium Inc (NASDAQ:CAVM)?
At Q2’s end, a total of 18 of the hedge funds we track were long in this stock, a change of 20% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings significantly.
According to our 13F database, Ryan Frick and Oliver Evans’s Dorsal Capital Management had the biggest position in Cavium Inc (NASDAQ:CAVM), worth close to $27.4 million, comprising 4.3% of its total 13F portfolio. Coming in second is Eric Bannasch of Cadian Capital, with a $12.9 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Van Schreiber’s Bennett Lawrence Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
As aggregate interest spiked, particular hedge funds have jumped into Cavium Inc (NASDAQ:CAVM) headfirst. Dorsal Capital Management, managed by Ryan Frick and Oliver Evans, established the biggest position in Cavium Inc (NASDAQ:CAVM). Dorsal Capital Management had 27.4 million invested in the company at the end of the quarter. Eric Bannasch’s Cadian Capital also initiated a $12.9 million position during the quarter. The following funds were also among the new CAVM investors: Van Schreiber’s Bennett Lawrence Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Insider trading activity in Cavium Inc (NASDAQ:CAVM)
Legal insider trading, particularly when it’s bullish, is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time period, Cavium Inc (NASDAQ:CAVM) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to Cavium Inc (NASDAQ:CAVM). These stocks are Atmel Corporation (NASDAQ:ATML), Cypress Semiconductor Corporation (NASDAQ:CY), Mellanox Technologies, Ltd. (NASDAQ:MLNX), Advanced Micro Devices, Inc. (NYSE:AMD), and Vishay Intertechnology (NYSE:VSH). This group of stocks belong to the semiconductor – broad line industry and their market caps are similar to CAVM’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Atmel Corporation (NASDAQ:ATML) | 25 | 0 | 0 |
| Cypress Semiconductor Corporation (NASDAQ:CY) | 13 | 0 | 0 |
| Mellanox Technologies, Ltd. (NASDAQ:MLNX) | 9 | 0 | 0 |
| Advanced Micro Devices, Inc. (NYSE:AMD) | 17 | 0 | 0 |
| Vishay Intertechnology (NYSE:VSH) | 24 | 0 | 0 |
Using the returns explained by the previously mentioned research, regular investors should always pay attention to hedge fund and insider trading sentiment, and Cavium Inc (NASDAQ:CAVM) is an important part of this process.
