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KLA-Tencor Corporation (KLAC): Hedge Fund and Insider Sentiment Unchanged, What Should You Do?

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To many of your peers, hedge funds are assumed to be bloated, old financial vehicles of a forgotten age. Although there are In excess of 8,000 hedge funds in operation currently, Insider Monkey looks at the upper echelon of this club, close to 525 funds. Analysts calculate that this group oversees the majority of the hedge fund industry’s total assets, and by keeping an eye on their highest quality stock picks, we’ve unsheathed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 33 percentage points in 11 months (find a sample of our picks).

Equally as key, positive insider trading activity is a second way to look at the marketplace. Obviously, there are many motivations for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this strategy if piggybackers understand where to look (learn more here).

Keeping this in mind, we’re going to study the newest info for KLA-Tencor Corporation (NASDAQ:KLAC).

Hedge fund activity in KLA-Tencor Corporation (NASDAQ:KLAC)

In preparation for the third quarter, a total of 30 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially.

KLA-Tencor Corporation (NASDAQ:KLAC)Out of the hedge funds we follow, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in KLA-Tencor Corporation (NASDAQ:KLAC). Renaissance Technologies has a $82.1 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which held a $62.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Paul Reeder and Edward Shapiro’s PAR Capital Management, David Harding’s Winton Capital Management and Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital.

Because KLA-Tencor Corporation (NASDAQ:KLAC) has witnessed bearish sentiment from the smart money’s best and brightest, logic holds that there were a few funds that slashed their positions entirely at the end of the second quarter. At the top of the heap, Donald Chiboucis’s Columbus Circle Investors dumped the largest position of the 450+ funds we key on, comprising about $17 million in stock. Andrew Sandler’s fund, Sandler Capital Management, also sold off its stock, about $11.9 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about KLA-Tencor Corporation (NASDAQ:KLAC)?

Bullish insider trading is at its handiest when the company in focus has seen transactions within the past 180 days. Over the latest half-year time period, KLA-Tencor Corporation (NASDAQ:KLAC) has experienced zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to KLA-Tencor Corporation (NASDAQ:KLAC). These stocks are Applied Materials, Inc. (NASDAQ:AMAT), Synopsys, Inc. (NASDAQ:SNPS), Advanced Semiconductor Engineering (ADR) (NYSE:ASX), Cree, Inc. (NASDAQ:CREE), and Lam Research Corporation (NASDAQ:LRCX). This group of stocks are in the semiconductor equipment & materials industry and their market caps are closest to KLAC’s market cap.

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