Should You Avoid Rofin-Sinar Technologies (RSTI)?

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Rofin-Sinar Technologies (NASDAQ:RSTI) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months.

Rofin-Sinar Technologies (NASDAQ:RSTI)In the eyes of most stock holders, hedge funds are assumed to be worthless, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey choose to focus on the bigwigs of this group, around 450 funds. Most estimates calculate that this group oversees most of the smart money’s total asset base, and by tracking their best investments, we have come up with a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as beneficial, positive insider trading activity is a second way to break down the financial markets. There are plenty of stimuli for an insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this strategy if “monkeys” understand where to look (learn more here).

Now, let’s take a look at the key action encompassing Rofin-Sinar Technologies (NASDAQ:RSTI).

What have hedge funds been doing with Rofin-Sinar Technologies (NASDAQ:RSTI)?

At Q1′s end, a total of 7 of the hedge funds we track were long in this stock, a change of -22% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Rofin-Sinar Technologies (NASDAQ:RSTI), worth close to $61.5 million, comprising 0.2% of its total 13F portfolio. On Royce & Associates’s heels is First Eagle Investment Management, managed by Jean-Marie Eveillard, which held a $49.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Martin Whitman’s Third Avenue Management, Mario Gabelli’s GAMCO Investors and John Overdeck and David Siegel’s Two Sigma Advisors.

Because Rofin-Sinar Technologies (NASDAQ:RSTI) has witnessed a declination in interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies that elected to cut their entire stakes last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the biggest investment of the 450+ funds we monitor, totaling close to $0.9 million in stock.. Jim Simons’s fund, Renaissance Technologies, also sold off its stock, about $0.4 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds last quarter.

What do corporate executives and insiders think about Rofin-Sinar Technologies (NASDAQ:RSTI)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past six months. Over the last 180-day time period, Rofin-Sinar Technologies (NASDAQ:RSTI) has seen 4 unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Rofin-Sinar Technologies (NASDAQ:RSTI). These stocks are Analogic Corporation (NASDAQ:ALOG), Measurement Specialties, Inc. (NASDAQ:MEAS), MTS Systems Corporation (NASDAQ:MTSC), FARO Technologies, Inc. (NASDAQ:FARO), and Badger Meter, Inc. (NYSE:BMI). This group of stocks are in the scientific & technical instruments industry and their market caps are similar to RSTI’s market cap.

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