Nam Tai Electronics, Inc. (NYSE:NTE) investors should pay attention to a decrease in hedge fund interest lately.
According to most traders, hedge funds are viewed as unimportant, outdated investment tools of the past. While there are greater than 8000 funds trading today, we at Insider Monkey look at the crème de la crème of this group, close to 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total asset base, and by paying attention to their highest performing equity investments, we have discovered a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 topped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as important, bullish insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are a variety of motivations for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this tactic if investors know where to look (learn more here).
Consequently, we’re going to take a look at the recent action regarding Nam Tai Electronics, Inc. (NYSE:NTE).
How are hedge funds trading Nam Tai Electronics, Inc. (NYSE:NTE)?
In preparation for this year, a total of 9 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.
According to our comprehensive database, Kahn Brothers, managed by Irving Kahn, holds the biggest position in Nam Tai Electronics, Inc. (NYSE:NTE). Kahn Brothers has a $39.8 million position in the stock, comprising 6.9% of its 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $24.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Chuck Royce’s Royce & Associates, Phil Frohlich’s Prescott Group Capital Management and Israel Englander’s Millennium Management.
Because Nam Tai Electronics, Inc. (NYSE:NTE) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that slashed their positions entirely in Q4. Interestingly, Jeffrey Vinik’s Vinik Asset Management dumped the biggest investment of all the hedgies we monitor, comprising about $1.6 million in stock.. Richard Schimel’s fund, Diamondback Capital, also dumped its stock, about $1.4 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Nam Tai Electronics, Inc. (NYSE:NTE)
Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past 180 days. Over the last six-month time period, Nam Tai Electronics, Inc. (NYSE:NTE) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Nam Tai Electronics, Inc. (NYSE:NTE). These stocks are Orbotech Ltd. (NASDAQ:ORBK), Methode Electronics Inc. (NYSE:MEI), Power One Inc (NASDAQ:PWER), Encore Wire Corporation (NASDAQ:WIRE), and Advanced Energy Industries, Inc. (NASDAQ:AEIS). This group of stocks belong to the diversified electronics industry and their market caps are closest to NTE’s market cap.