Monolithic Power Systems, Inc. (NASDAQ:MPWR) investors should be aware of an increase in activity from the world’s largest hedge funds recently.
According to most market participants, hedge funds are seen as slow, outdated financial tools of the past. While there are more than 8000 funds in operation at the moment, we look at the bigwigs of this club, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total asset base, and by keeping an eye on their best stock picks, we have unearthed a few investment strategies that have historically outpaced Mr. 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as important, bullish insider trading sentiment is a second way to break down the world of equities. Obviously, there are a number of reasons for an executive to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if you know where to look (learn more here).
Consequently, it’s important to take a glance at the recent action encompassing Monolithic Power Systems, Inc. (NASDAQ:MPWR).
Hedge fund activity in Monolithic Power Systems, Inc. (NASDAQ:MPWR)
At the end of the first quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 57% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.
According to our comprehensive database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Monolithic Power Systems, Inc. (NASDAQ:MPWR). Adage Capital Management has a $43.8 million position in the stock, comprising 0.1% of its 13F portfolio. On Adage Capital Management’s heels is Donald Chiboucis of Columbus Circle Investors, with a $26.8 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Clint Carlson’s Carlson Capital and James Dondero’s Highland Capital Management.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Empire Capital Management, managed by Scott Fine and Peter Richards, created the largest position in Monolithic Power Systems, Inc. (NASDAQ:MPWR). Empire Capital Management had 2.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $2 million investment in the stock during the quarter. The other funds with brand new MPWR positions are John Overdeck and David Siegel’s Two Sigma Advisors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
How have insiders been trading Monolithic Power Systems, Inc. (NASDAQ:MPWR)?
Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past 180 days. Over the last 180-day time period, Monolithic Power Systems, Inc. (NASDAQ:MPWR) has seen zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Monolithic Power Systems, Inc. (NASDAQ:MPWR). These stocks are SolarCity Corp (NASDAQ:SCTY), JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO), Magnachip Semiconductor Corp (NYSE:MX), Lattice Semiconductor (NASDAQ:LSCC), and Himax Technologies, Inc. (ADR) (NASDAQ:HIMX). This group of stocks are in the semiconductor – specialized industry and their market caps resemble MPWR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| SolarCity Corp (NASDAQ:SCTY) | 8 | 5 | 2 |
| JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) | 4 | 0 | 0 |
| Magnachip Semiconductor Corp (NYSE:MX) | 16 | 0 | 2 |
| Lattice Semiconductor (NASDAQ:LSCC) | 18 | 0 | 2 |
| Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) | 9 | 0 | 0 |
With the returns shown by the aforementioned tactics, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Monolithic Power Systems, Inc. (NASDAQ:MPWR) is no exception.
