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Integrated Device Technology, Inc. (NASDAQ:IDTI): Insiders Are Buying, Should You? – Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD), Intersil Corp (NASDAQ:ISIL)

Integrated Device Technology, Inc. (NASDAQ:IDTI) has experienced a decrease in activity from the world’s largest hedge funds lately.

Integrated Device Technology, Inc. (NASDAQ:IDTI)

To most stock holders, hedge funds are perceived as worthless, outdated investment vehicles of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey hone in on the leaders of this club, about 450 funds. It is widely believed that this group controls most of all hedge funds’ total capital, and by tracking their top equity investments, we have determined a few investment strategies that have historically outstripped Mr. Market. 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 outpaced the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Just as key, optimistic insider trading activity is another way to break down the marketplace. There are plenty of motivations for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if “monkeys” know what to do (learn more here).

Now, let’s take a look at the latest action surrounding Integrated Device Technology, Inc. (NASDAQ:IDTI).

What does the smart money think about Integrated Device Technology, Inc. (NASDAQ:IDTI)?

In preparation for this year, a total of 14 of the hedge funds we track were bullish in this stock, a change of -18% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Starboard Value LP, managed by Jeffrey Smith, holds the largest position in Integrated Device Technology, Inc. (NASDAQ:IDTI). Starboard Value LP has a $91 million position in the stock, comprising 10.4% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $19 million position; 0% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Bill Miller’s Legg Mason Capital Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and D. E. Shaw’s D E Shaw.

Since Integrated Device Technology, Inc. (NASDAQ:IDTI) has witnessed a declination in interest from hedge fund managers, it’s safe to say that there is a sect of hedgies that slashed their full holdings at the end of the year. Intriguingly, Israel Englander’s Millennium Management said goodbye to the biggest investment of the “upper crust” of funds we monitor, comprising about $1 million in stock.. Sander Gerber’s fund, Hudson Bay Capital Management, also dumped its stock, about $1 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds at the end of the year.

Insider trading activity in Integrated Device Technology, Inc. (NASDAQ:IDTI)

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time frame, Integrated Device Technology, Inc. (NASDAQ:IDTI) has experienced 1 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Integrated Device Technology, Inc. (NASDAQ:IDTI). These stocks are Advanced Micro Devices, Inc. (NYSE:AMD), Cypress Semiconductor Corporation (NASDAQ:CY), M/A-COM Technology Solutions Holdings (NASDAQ:MTSI), Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD), and Intersil Corp (NASDAQ:ISIL). This group of stocks are in the semiconductor – broad line industry and their market caps resemble IDTI’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Advanced Micro Devices, Inc. (NYSE:AMD) 17 1 1
Cypress Semiconductor Corporation (NASDAQ:CY) 16 2 2
M/A-COM Technology Solutions Holdings (NASDAQ:MTSI) 0 5
Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD) 10 0 0
Intersil Corp (NASDAQ:ISIL) 9 1 3

With the returns shown by our strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Integrated Device Technology, Inc. (NASDAQ:IDTI) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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