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Hedge Funds Are Dumping Super Micro Computer, Inc. (SMCI)

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Super Micro Computer, Inc. (NASDAQ:SMCI) was in 6 hedge funds’ portfolio at the end of the first quarter of 2013. SMCI has experienced a decrease in enthusiasm from smart money lately. There were 6 hedge funds in our database with SMCI positions at the end of the previous quarter.

Chuck Royce

According to most market participants, hedge funds are seen as slow, old financial tools of yesteryear. While there are over 8000 funds with their doors open today, we at Insider Monkey look at the masters of this group, around 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by paying attention to their top stock picks, we have uncovered a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, positive insider trading sentiment is another way to parse down the stock market universe. Just as you’d expect, there are many reasons for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this strategy if “monkeys” understand where to look (learn more here).

Keeping this in mind, we’re going to take a look at the key action surrounding Super Micro Computer, Inc. (NASDAQ:SMCI).

What have hedge funds been doing with Super Micro Computer, Inc. (NASDAQ:SMCI)?

At Q1’s end, a total of 6 of the hedge funds we track held long positions in this stock, a change of 0% from the first quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Super Micro Computer, Inc. (NASDAQ:SMCI), worth close to $12.4 million, comprising less than 0.1%% of its total 13F portfolio. On Royce & Associates’s heels is Millennium Management, managed by Israel Englander, which held a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include D. E. Shaw’s D E Shaw, Ken Gray and Steve Walsh’s Bryn Mawr Capital and Paul Tudor Jones’s Tudor Investment Corp.

Seeing as Super Micro Computer, Inc. (NASDAQ:SMCI) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there were a few fund managers that elected to cut their entire stakes last quarter. It’s worth mentioning that Ken Grossman and Glen Schneider’s SG Capital Management cut the largest stake of the 450+ funds we key on, worth close to $1.8 million in stock.. Charles Davidson’s fund, Wexford Capital, also dropped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Super Micro Computer, Inc. (NASDAQ:SMCI)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past six months. Over the last 180-day time frame, Super Micro Computer, Inc. (NASDAQ:SMCI) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Super Micro Computer, Inc. (NASDAQ:SMCI). These stocks are Silicom Ltd. (NASDAQ:SILC), Digi International Inc. (NASDAQ:DGII), Globecomm Systems, Inc. (NASDAQ:GCOM), Extreme Networks, Inc (NASDAQ:EXTR), and Black Box Corporation (NASDAQ:BBOX). This group of stocks are the members of the networking & communication devices industry and their market caps are similar to SMCI’s market cap.

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