To many of your fellow readers, hedge funds are seen as overrated, old financial vehicles of an era lost to time. Although there are over 8,000 hedge funds in operation in present day, Insider Monkey aim at the aristocrats of this club, around 525 funds. It is widely held that this group controls the majority of the hedge fund industry's total assets, and by paying attention to their highest quality stock picks, we've found a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as key, positive insider trading sentiment is a second way to look at the stock market universe. Just as you'd expect, there are a number of incentives for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Many empirical studies have demonstrated the impressive potential of this tactic if you understand what to do (learn more here).
Furthermore, we're going to discuss the recent info surrounding Harris Corporation (NYSE:HRS).
In preparation for the third quarter, a total of 17 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully.
According to our 13F database, Winton Capital Management, managed by David Harding, holds the most valuable position in Harris Corporation (NYSE:HRS). Winton Capital Management has a $45.2 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Gilchrist Berg of Water Street Capital, with a $17.3 million position; 0.6% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Michael Price's MFP Investors, Ken Griffin's Citadel Investment Group and Joel Greenblatt's Gotham Asset Management.
Because Harris Corporation (NYSE:HRS) has witnessed declining interest from the smart money's best and brightest, it's easy to see that there were a few fund managers who were dropping their entire stakes in Q1. Intriguingly, Debra Fine's Fine Capital Partners cut the largest stake of the 450+ funds we track, worth an estimated $15.8 million in stock, and Amy Minella of Cardinal Capital was right behind this move, as the fund cut about $5.7 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Legal insider trading, particularly when it's bullish, is particularly usable when the company in focus has seen transactions within the past half-year. Over the latest 180-day time period, Harris Corporation (NYSE:HRS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to Harris Corporation (NYSE:HRS). These stocks are ViaSat, Inc. (NASDAQ:VSAT), Nokia Corporation (ADR) (NYSE:NOK), Alcatel Lucent SA (ADR) (NYSE:ALU), JDS Uniphase Corp (NASDAQ:JDSU), and Echostar Corporation (NASDAQ:SATS). This group of stocks are the members of the communication equipment industry and their market caps match HRS's market cap.