Is WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) ready to rally soon? Prominent investors are taking a pessimistic view. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
At the moment, there are tons of metrics market participants can use to monitor publicly traded companies. Some of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite money managers can beat their index-focused peers by a solid amount (see just how much).
Just as beneficial, optimistic insider trading sentiment is a second way to break down the stock market universe. Just as you'd expect, there are a variety of stimuli for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers understand what to do (learn more here).
Keeping this in mind, let's take a peek at the latest action regarding WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX).
Heading into Q2, a total of 13 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter.
Since WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) has faced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that decided to sell off their positions entirely in Q1. It's worth mentioning that James Dondero's Highland Capital Management cut the biggest stake of the 450+ funds we monitor, comprising close to $0.8 million in stock.
Insider trading activity, especially when it's bullish, is at its handiest when the company we're looking at has experienced transactions within the past 180 days. Over the latest six-month time period, WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX). These stocks are Bio-Reference Laboratories Inc (NASDAQ:BRLI), Alere Inc (NYSE:ALR), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), ICON plc - Ordinary Shares (NASDAQ:ICLR), and Genomic Health, Inc. (NASDAQ:GHDX). This group of stocks are the members of the medical laboratories & research industry and their market caps match WX's market cap.