Is Nova Measuring Instruments Ltd. (NASDAQ:NVMI) the right investment to pursue these days? Hedge funds are selling. The number of bullish hedge fund positions fell by 1 recently.
To most traders, hedge funds are perceived as underperforming, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation today, we choose to focus on the top tier of this group, about 450 funds. It is estimated that this group has its hands on the lion's share of the smart money's total asset base, and by monitoring their top stock picks, we have spotted a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as key, bullish insider trading sentiment is another way to break down the world of equities. Just as you'd expect, there are plenty of incentives for a bullish insider to drop shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this tactic if shareholders know where to look (learn more here).
Keeping this in mind, let's take a peek at the key action encompassing Nova Measuring Instruments Ltd. (NASDAQ:NVMI).
Heading into Q2, a total of 6 of the hedge funds we track were long in this stock, a change of -14% from the previous quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially.
Of the funds we track, Invicta Capital Management, managed by Gregory A. Weaver, holds the most valuable position in Nova Measuring Instruments Ltd. (NASDAQ:NVMI). Invicta Capital Management has a $22.2 million position in the stock, comprising 10% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $10.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish include Kelly Cardwell's Central Square Management, D. E. Shaw's D E Shaw and John Overdeck and David Siegel's Two Sigma Advisors.
Because Nova Measuring Instruments Ltd. (NASDAQ:NVMI) has faced falling interest from the smart money, it's safe to say that there was a specific group of fund managers that slashed their positions entirely at the end of the first quarter. Interestingly, Peter Algert and Kevin Coldiron's Algert Coldiron Investors dumped the largest position of the 450+ funds we track, comprising about $0.4 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund cut about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds at the end of the first quarter.
Insider buying is most useful when the company in focus has experienced transactions within the past 180 days. Over the latest 180-day time frame, Nova Measuring Instruments Ltd. (NASDAQ:NVMI) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey's research, retail investors must always pay attention to hedge fund and insider trading activity, and Nova Measuring Instruments Ltd. (NASDAQ:NVMI) shareholders fit into this picture quite nicely.