Is Emulex Corporation (NYSE:ELX) ready to raly soon? Investors who are in the know are taking a bearish view. The number of long hedge fund positions decreased by 3 lately.
In today’s marketplace, there are tons of methods market participants can use to monitor their holdings. Two of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best investment managers can beat the broader indices by a superb margin (see just how much).
Equally as integral, bullish insider trading sentiment is a second way to parse down the financial markets. Just as you'd expect, there are plenty of reasons for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this strategy if piggybackers know what to do (learn more here).
Now, we're going to take a peek at the latest action surrounding Emulex Corporation (NYSE:ELX).
Heading into 2013, a total of 17 of the hedge funds we track were bullish in this stock, a change of -15% from the previous quarter. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes considerably.
According to our comprehensive database, Paul Singer's Elliott Management had the largest position in Emulex Corporation (NYSE:ELX), worth close to $65 million, comprising 2% of its total 13F portfolio. On Elliott Management's heels is Altai Capital, managed by Rishi Bajaj, Toby Symonds, and Steve Tesoriere, which held a $30 million position; the fund has 11.9% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Ken Griffin's Citadel Investment Group, Jim Simons's Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Because Emulex Corporation (NYSE:ELX) has experienced bearish sentiment from the smart money, we can see that there was a specific group of money managers who were dropping their positions entirely heading into 2013. Intriguingly, Mark Broach's Manatuck Hill Partners said goodbye to the biggest stake of all the hedgies we key on, totaling close to $12 million in stock., and Joseph A. Jolson of Harvest Capital Strategies was right behind this move, as the fund dumped about $3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds heading into 2013.
Insider buying is most useful when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time period, Emulex Corporation (NYSE:ELX) has experienced 2 unique insiders buying, and 5 insider sales (see the details of insider trades here).
With the returns demonstrated by our studies, everyday investors must always watch hedge fund and insider trading activity, and Emulex Corporation (NYSE:ELX) is an important part of this process.
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.