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NXP Semiconductors NV (NASDAQ:NXPI): Insiders Are Dumping, Should You?

NXP Semiconductors NV (NASDAQ:NXPI) was in 20 hedge funds’ portfolio at the end of the fourth quarter of 2012. NXPI has experienced an increase in enthusiasm from smart money in recent months. There were 18 hedge funds in our database with NXPI holdings at the end of the previous quarter.

If you’d ask most market participants, hedge funds are assumed to be unimportant, outdated financial tools of the past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey hone in on the masters of this group, around 450 funds. It is widely believed that this group oversees the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their best equity investments, we have uncovered a few investment strategies that have historically outstripped the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

NXP Semiconductors NV (NXPI)Just as key, positive insider trading activity is another way to break down the financial markets. Just as you’d expect, there are many reasons for an insider to sell shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).

Keeping this in mind, let’s take a gander at the latest action regarding NXP Semiconductors NV (NASDAQ:NXPI).

What have hedge funds been doing with NXP Semiconductors NV (NASDAQ:NXPI)?

In preparation for this year, a total of 20 of the hedge funds we track held long positions in this stock, a change of 11% from the third quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably.

Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the largest position in NXP Semiconductors NV (NASDAQ:NXPI). Citadel Investment Group has a $61 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Donald Chiboucis of Columbus Circle Investors, with a $58 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Ricky Sandler’s Eminence Capital, Steven Cohen’s SAC Capital Advisors and Jim Simons’s Renaissance Technologies.

As aggregate interest increased, specific money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, established the most outsized position in NXP Semiconductors NV (NASDAQ:NXPI). Renaissance Technologies had 10 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $8 million position during the quarter. The other funds with brand new NXPI positions are D. E. Shaw’s D E Shaw, Glenn Russell Dubin’s Highbridge Capital Management, and Joseph A. Jolson’s Harvest Capital Strategies.

How are insiders trading NXP Semiconductors NV (NASDAQ:NXPI)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the last six-month time period, NXP Semiconductors NV (NASDAQ:NXPI) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the results shown by Insider Monkey’s strategies, retail investors should always watch hedge fund and insider trading sentiment, and NXP Semiconductors NV (NASDAQ:NXPI) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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.

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