InvenSense Inc (NYSE:INVN) has had a stellar 2013, up nearly 60%, but one sect of the marketplace appears to be taking profits. Should you follow?
To the average investor, there are plenty of methods market participants can use to track Mr. Market. Some of the most useful 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 top money managers can outpace the S&P 500 by a significant margin (see just how much).
Equally as useful, positive insider trading activity is a second way to analyze the financial markets. Just as you'd expect, there are plenty of reasons for an executive to drop shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the impressive potential of this method if "monkeys" know what to do (learn more here).
Thus, it's important to examine the recent info surrounding InvenSense Inc (NYSE:INVN).
Heading into Q3, a total of 14 of the hedge funds we track held long positions in this stock, a change of -22% from the previous quarter. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes significantly.
Out of the hedge funds we follow, Daniel Benton's Andor Capital Management had the biggest position in InvenSense Inc (NYSE:INVN), worth close to $30.8 million, accounting for 4.5% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $17.4 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Scott Fine and Peter Richards's Empire Capital Management, Mark Kingdon's Kingdon Capital and Phill Gross and Robert Atchinson's Adage Capital Management.
Judging by the fact that InvenSense Inc (NYSE:INVN) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few funds that slashed their entire stakes in Q1. Intriguingly, Jason F. Harris's Kendall Square Capital dropped the largest investment of the 450+ funds we key on, totaling close to $5.7 million in stock, and Steven Cohen of SAC Capital Advisors was right behind this move, as the fund said goodbye to about $3.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds in Q1.
Insider buying made by high-level executives is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time period, InvenSense Inc (NYSE:INVN) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to InvenSense Inc (NYSE:INVN). These stocks are QLogic Corporation (NASDAQ:QLGC), MEMC Electronic Materials, Inc. (NYSE:WFR), Cabot Microelectronics Corporation (NASDAQ:CCMP), TriQuint Semiconductor (NASDAQ:TQNT), and Diodes Incorporated (NASDAQ:DIOD). This group of stocks are in the semiconductor - integrated circuits industry and their market caps are closest to INVN's market cap.