STEC, Inc. (NASDAQ:STEC) was in 15 hedge funds’ portfolio at the end of March. STEC shareholders have witnessed a decrease in hedge fund sentiment recently. There were 16 hedge funds in our database with STEC positions at the end of the previous quarter.
If you’d ask most investors, hedge funds are perceived as underperforming, old financial tools of yesteryear. While there are over 8000 funds with their doors open today, we at Insider Monkey choose to focus on the bigwigs of this group, about 450 funds. Most estimates calculate that this group oversees most of all hedge funds’ total asset base, and by watching their best equity investments, we have unsheathed a few investment strategies that have historically outpaced 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 began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as beneficial, optimistic insider trading sentiment is a second way to parse down the stock market universe. Obviously, there are a variety of incentives for an upper level exec to downsize shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).
Now, let’s take a gander at the latest action encompassing STEC, Inc. (NASDAQ:STEC).
What have hedge funds been doing with STEC, Inc. (NASDAQ:STEC)?
At Q1’s end, a total of 15 of the hedge funds we track were bullish in this stock, a change of -6% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully.
When looking at the hedgies we track, Eric Bannasch’s Cadian Capital had the largest position in STEC, Inc. (NASDAQ:STEC), worth close to $11.6 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $9.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, Stuart Peterson’s Artis Capital Management and Philippe Laffont’s Coatue Management.
Due to the fact that STEC, Inc. (NASDAQ:STEC) has experienced declining sentiment from the smart money, we can see that there were a few fund managers that elected to cut their positions entirely at the end of the first quarter. Intriguingly, Paul Tudor Jones’s Tudor Investment Corp dropped the largest position of the “upper crust” of funds we watch, worth about $0.4 million in stock., and Glenn Russell Dubin of Highbridge Capital Management was right behind this move, as the fund dropped about $0.1 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds at the end of the first quarter.
How are insiders trading STEC, Inc. (NASDAQ:STEC)?
Insider trading activity, especially when it’s bullish, is most useful when the company in focus has seen transactions within the past 180 days. Over the latest half-year time period, STEC, Inc. (NASDAQ:STEC) has seen 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to STEC, Inc. (NASDAQ:STEC). These stocks are OCZ Technology Group Inc. (NASDAQ:OCZ), Quantum Corp (NYSE:QTM), Imation Corp. (NYSE:IMN), Xyratex Ltd. (NASDAQ:XRTX), and Datalink Corporation (NASDAQ:DTLK). This group of stocks are in the data storage devices industry and their market caps are similar to STEC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| OCZ Technology Group Inc. (NASDAQ:OCZ) | 5 | 0 | 0 |
| Quantum Corp (NYSE:QTM) | 11 | 1 | 0 |
| Imation Corp. (NYSE:IMN) | 9 | 1 | 0 |
| Xyratex Ltd. (NASDAQ:XRTX) | 9 | 0 | 0 |
| Datalink Corporation (NASDAQ:DTLK) | 7 | 0 | 5 |
With the results exhibited by our time-tested strategies, everyday investors should always monitor hedge fund and insider trading sentiment, and STEC, Inc. (NASDAQ:STEC) applies perfectly to this mantra.
