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Hedge Funds Aren’t Crazy About LSI Corp (NASDAQ:LSI) Anymore

Is LSI Corp (NASDAQ:LSI) ready to raly soon? Investors who are in the know are selling. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience

If you’d ask most investors, hedge funds are perceived as underperforming, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation today, we at Insider Monkey look at the crème de la crème of this group, about 450 funds. It is widely believed that this group oversees the majority of the smart money’s total capital, and by keeping an eye on their best investments, we have unearthed a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (see the details here).


Equally as key, positive insider trading sentiment is a second way to break down the financial markets. Just as you’d expect, there are plenty of reasons for an insider to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this method if you know what to do (learn more here).

Keeping this in mind, let’s take a gander at the key action encompassing LSI Corp (NASDAQ:LSI).

What does the smart money think about LSI Corp (NASDAQ:LSI)?

In preparation for this year, a total of 26 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably.

Of the funds we track, Ken Griffin’s Citadel Investment Group had the largest position in LSI Corp (NASDAQ:LSI), worth close to $185 million billion, comprising 0.3% of its total 13F portfolio. Coming in second is Iridian Asset Management, managed by David Cohen and Harold Levy, which held a $178 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.

Due to the fact that LSI Corp (NASDAQ:LSI) has faced falling interest from hedge fund managers, it’s easy to see that there is a sect of money managers that decided to sell off their full holdings in Q4. Interestingly, Scott Fine and Peter Richards’s Empire Capital Management sold off the largest stake of the 450+ funds we track, worth about $38 million in stock.. Scott Fine and Peter Richards’s fund, Empire Capital Management, also said goodbye to its call options., about $28 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with LSI Corp (NASDAQ:LSI)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has experienced transactions within the past six months. Over the last half-year time frame, LSI Corp (NASDAQ:LSI) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

With the returns shown by the aforementioned studies, retail investors must always watch hedge fund and insider trading activity, and LSI Corp (NASDAQ:LSI) shareholders fit into this picture quite nicely.

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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