Quantum Corp (QTM): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?: Imation Corp. (IMN), Emulex Corporation (ELX)

Quantum Corp (NYSE:QTM) investors should pay attention to a decrease in support from the world’s most elite money managers lately.

Quantum Corp (NYSE:QTM)

At the moment, there are a multitude of methods market participants can use to track their holdings. Two of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best fund managers can trounce their index-focused peers by a healthy amount (see just how much).

Just as beneficial, bullish insider trading sentiment is another way to break down the marketplace. Obviously, there are lots of reasons for an insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).

Keeping this in mind, we’re going to take a look at the latest action surrounding Quantum Corp (NYSE:QTM).

How have hedgies been trading Quantum Corp (NYSE:QTM)?

Heading into 2013, a total of 11 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, Starboard Value LP, managed by Jeffrey Smith, holds the most valuable position in Quantum Corp (NYSE:QTM). Starboard Value LP has a $29 million position in the stock, comprising 3.2% of its 13F portfolio. On Starboard Value LP’s heels is Private Capital Management, managed by Gregg J. Powers, which held a $25 million position; 2.8% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Brett Hendrickson’s Nokomis Capital, Stuart Peterson’s Artis Capital Management and Cliff Asness’s AQR Capital Management.

Due to the fact that Quantum Corp (NYSE:QTM) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that elected to cut their full holdings heading into 2013. Interestingly, Jim Simons’s Renaissance Technologies dropped the largest investment of the 450+ funds we monitor, totaling about $1 million in stock., and Mario Gabelli of GAMCO Investors was right behind this move, as the fund dumped about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Quantum Corp (NYSE:QTM)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest half-year time frame, Quantum Corp (NYSE:QTM) has seen 1 unique insiders purchasing, 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 Quantum Corp (NYSE:QTM). These stocks are Imation Corp. (NYSE:IMN), Emulex Corporation (NYSE:ELX), STEC, Inc. (NASDAQ:STEC), Datalink Corporation (NASDAQ:DTLK), and Xyratex Ltd. (NASDAQ:XRTX). This group of stocks are in the data storage devices industry and their market caps are similar to QTM’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Imation Corp. (NYSE:IMN) 11 0 0
Emulex Corporation (NYSE:ELX) 17 2 5
STEC, Inc. (NASDAQ:STEC) 15 2 0
Datalink Corporation (NASDAQ:DTLK) 5 0 3
Xyratex Ltd. (NASDAQ:XRTX) 7 0 0

With the results exhibited by the aforementioned time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading activity, and Quantum Corp (NYSE:QTM) shareholders fit into this picture quite nicely.

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

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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