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Should You Avoid TriQuint Semiconductor (TQNT)?

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TriQuint Semiconductor (NASDAQ:TQNT)Is TriQuint Semiconductor (NASDAQ:TQNT) undervalued? Money managers are reducing their bets on the stock. The number of long hedge fund positions were cut by 6 recently.

According to most stock holders, hedge funds are seen as worthless, outdated financial tools of years past. While there are over 8000 funds in operation today, we hone in on the elite of this club, about 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total asset base, and by watching their highest performing investments, we have identified a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, positive insider trading activity is another way to parse down the investments you’re interested in. There are a variety of motivations for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

Keeping this in mind, let’s take a look at the latest action encompassing TriQuint Semiconductor (NASDAQ:TQNT).

How have hedgies been trading TriQuint Semiconductor (NASDAQ:TQNT)?

Heading into Q2, a total of 8 of the hedge funds we track were long in this stock, a change of -43% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Starboard Value LP, managed by Jeffrey Smith, holds the biggest position in TriQuint Semiconductor (NASDAQ:TQNT). Starboard Value LP has a $36.3 million position in the stock, comprising 3.3% of its 13F portfolio. On Starboard Value LP’s heels is Ken Fisher of Fisher Asset Management, with a $32.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Chuck Royce’s Royce & Associates, Steve Shapiro’s Intrepid Capital Management Inc DE and Matthew Hulsizer’s PEAK6 Capital Management.

Due to the fact that TriQuint Semiconductor (NASDAQ:TQNT) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers that decided to sell off their positions entirely last quarter. Interestingly, Israel Englander’s Millennium Management cut the biggest stake of the 450+ funds we key on, totaling about $2.6 million in stock.. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $2.5 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 6 funds last quarter.

How have insiders been trading TriQuint Semiconductor (NASDAQ:TQNT)?

Insider buying is best served when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time period, TriQuint Semiconductor (NASDAQ:TQNT) has experienced 2 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to TriQuint Semiconductor (NASDAQ:TQNT). These stocks are Diodes Incorporated (NASDAQ:DIOD), EZchip Semiconductor Ltd. (NASDAQ:EZCH), InvenSense Inc (NYSE:INVN), OmniVision Technologies, Inc. (NASDAQ:OVTI), and Cabot Microelectronics Corporation (NASDAQ:CCMP). This group of stocks are the members of the semiconductor – integrated circuits industry and their market caps match TQNT’s market cap.

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