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Should You Avoid International Game Technology (IGT)?

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International Game Technology (NYSE:IGT) was in 26 hedge funds’ portfolio at the end of the first quarter of 2013. IGT has seen a decrease in enthusiasm from smart money in recent months. There were 33 hedge funds in our database with IGT positions at the end of the previous quarter.

According to most traders, hedge funds are perceived as slow, old financial vehicles of the past. While there are greater than 8000 funds with their doors open today, we hone in on the top tier of this club, around 450 funds. It is estimated that this group controls the majority of all hedge funds’ total asset base, and by tracking their highest performing equity investments, we have deciphered a few investment strategies that have historically outstripped Mr. 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 started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, bullish insider trading activity is a second way to parse down the investments you’re interested in. As the old adage goes: there are a number of stimuli for an insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if piggybackers understand where to look (learn more here).

With these “truths” under our belt, let’s take a peek at the key action surrounding International Game Technology (NYSE:IGT).

What have hedge funds been doing with International Game Technology (NYSE:IGT)?

Heading into Q2, a total of 26 of the hedge funds we track held long positions in this stock, a change of -21% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably.

International Game Technology (NYSE: IGT)Of the funds we track, John W. Rogers’s Ariel Investments had the most valuable position in International Game Technology (NYSE:IGT), worth close to $134.7 million, accounting for 2.3% of its total 13F portfolio. Sitting at the No. 2 spot is Gates Capital Management, managed by Jeffrey Gates, which held a $134.7 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Dmitry Balyasny’s Balyasny Asset Management, Ricky Sandler’s Eminence Capital and Robert Boucai’s Newbrook Capital Advisors.

Seeing as International Game Technology (NYSE:IGT) has faced bearish sentiment from the smart money, it’s easy to see that there were a few funds that decided to sell off their positions entirely at the end of the first quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital said goodbye to the biggest investment of all the hedgies we monitor, comprising about $31.9 million in stock.. Ahmet Okumus’s fund, Okumus Fund Management, also dropped its stock, about $12.7 million worth. These transactions are interesting, as total hedge fund interest dropped by 7 funds at the end of the first quarter.

What have insiders been doing with International Game Technology (NYSE:IGT)?

Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest 180-day time period, International Game Technology (NYSE:IGT) has seen 2 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to International Game Technology (NYSE:IGT). These stocks are Changyou.Com Ltd (ADR) (NASDAQ:CYOU), Cornerstone OnDemand, Inc. (NASDAQ:CSOD), Rovi Corporation (NASDAQ:ROVI) and Electronic Arts Inc. (NASDAQ:EA). All of these stocks are in the multimedia & graphics software industry and their market caps resemble IGT’s market cap.

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