If you were to ask many investors, hedge funds are assumed to be overrated, old investment tools of an era lost to time. Although there are over 8,000 hedge funds with their doors open today, this site focuses on the masters of this group, close to 525 funds. Analysts calculate that this group controls most of all hedge funds’ total assets, and by watching their highest quality investments, we’ve found 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 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 33 percentage points in 11 months (find a sample of our picks).
Just as key, positive insider trading sentiment is a second way to look at the stock market universe. There are a variety of incentives for an executive to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this tactic if piggybackers understand what to do (learn more here).
Keeping this in mind, we’re going to study the newest info for Microchip Technology Inc. (NASDAQ:MCHP).
Hedge fund activity in Microchip Technology Inc. (NASDAQ:MCHP)
At Q2’s end, a total of 22 of the hedge funds we track held long positions in this stock, a change of -8% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully.
Due to the fact Microchip Technology Inc. (NASDAQ:MCHP) has experienced declining interest from the smart money’s best and brightest, it’s easy to see that there is a sect of hedgies that elected to cut their positions entirely heading into Q2. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest position of the 450+ funds we watch, worth about $36.7 million in stock, and Charles Clough of Clough Capital Partners was right behind this move, as the fund sold off about $15.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q2.
What have insiders been doing with Microchip Technology Inc. (NASDAQ:MCHP)?
Legal insider trading, particularly when it’s bullish, is best served when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time frame, Microchip Technology Inc. (NASDAQ:MCHP) has experienced zero unique insiders buying, 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 Microchip Technology Inc. (NASDAQ:MCHP). These stocks are ARM Holdings plc (ADR) (NASDAQ:ARMH), LSI Corp (NASDAQ:LSI), Altera Corporation (NASDAQ:ALTR), Linear Technology Corporation (NASDAQ:LLTC), and NVIDIA Corporation (NASDAQ:NVDA). This group of stocks are the members of the semiconductor – specialized industry and their market caps resemble MCHP’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| ARM Holdings plc (ADR) (NASDAQ:ARMH) | 21 | 0 | 0 |
| LSI Corp (NASDAQ:LSI) | 28 | 0 | 0 |
| Altera Corporation (NASDAQ:ALTR) | 20 | 0 | 0 |
| Linear Technology Corporation (NASDAQ:LLTC) | 21 | 0 | 0 |
| NVIDIA Corporation (NASDAQ:NVDA) | 29 | 0 | 0 |
Using the returns explained by the previously mentioned analyses, regular investors should always pay attention to hedge fund and insider trading activity, and Microchip Technology Inc. (NASDAQ:MCHP) shareholders fit into this picture quite nicely.
