VMware, Inc. (NYSE:VMW) investors should pay attention to a decrease in hedge fund interest recently.
In the financial world, there are dozens of gauges investors can use to monitor Mr. Market. A duo of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can trounce the broader indices by a significant margin (see just how much).
Equally as key, bullish insider trading activity is a second way to parse down the stock market universe. As the old adage goes: there are a variety of stimuli for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the useful potential of this tactic if "monkeys" know where to look (learn more here).
With all of this in mind, it's important to take a gander at the latest action encompassing VMware, Inc. (NYSE:VMW).
Heading into Q2, a total of 28 of the hedge funds we track were bullish in this stock, a change of -22% from the first quarter.
Because VMware, Inc. (NYSE:VMW) has experienced a declination in interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds that decided to sell off their entire stakes in Q1. It's worth mentioning that David Stemerman's Conatus Capital Management dropped the largest stake of all the hedgies we track, valued at close to $52.8 million in stock.. Paul Reeder and Edward Shapiro's fund, PAR Capital Management, also sold off its stock, about $17.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 8 funds in Q1.
Insider buying is best served when the company in question has seen transactions within the past six months. Over the last six-month time frame, VMware, Inc. (NYSE:VMW) has experienced 1 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to VMware, Inc. (NYSE:VMW). These stocks are Concur Technologies, Inc. (NASDAQ:CNQR), National Instruments Corp (NASDAQ:NATI), ANSYS, Inc. (NASDAQ:ANSS), Autodesk, Inc. (NASDAQ:ADSK), and Infosys Ltd ADR (NYSE:INFY). All of these stocks are in the 0 industry and their market caps resemble VMW's market cap.