If you’d ask most stock holders, hedge funds are seen as underperforming, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, we hone in on the masters of this club, close to 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total capital, and by monitoring their highest performing investments, we have revealed a few investment strategies that have historically outpaced the S&P 500 index. 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 beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as integral, positive insider trading activity is another way to parse down the financial markets. Obviously, there are a number of motivations for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).
Consequently, let’s take a look at the recent action encompassing Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP).
Hedge fund activity in Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP)
Heading into 2013, a total of 5 of the hedge funds we track were bullish in this stock, a change of -38% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably.
When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP). Renaissance Technologies has a $6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Shah Capital Management, managed by Himanshu H. Shah, which held a $4.3 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Mark McGoldrick and Jason Maynard’s Mouth Kellett Capital Management, D. E. Shaw’s D E Shaw and Daniel S. Och’s OZ Management.
Due to the fact that Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds that slashed their full holdings last quarter. It’s worth mentioning that Michael Kao’s Akanthos Capital dropped the biggest position of all the hedgies we watch, comprising about $0.4 million in stock., and Peter J. Eichler Jr. of Aletheia Research and Management was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds last quarter.
How are insiders trading Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP)?
Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time frame, Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) has experienced zero 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 Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP). These stocks are RF Industries, Ltd. (NASDAQ:RFIL), Jinpan International Limited (NASDAQ:JST), Espey Manufacturing & Electronics Corp. (NYSEAMEX:ESP), SL Industries, Inc. (NYSEAMEX:SLI), and Cogo Group Inc (NASDAQ:COGO). This group of stocks are the members of the diversified electronics industry and their market caps resemble STP’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| RF Industries, Ltd. (NASDAQ:RFIL) | 2 | 0 | 7 |
| Jinpan International Limited (NASDAQ:JST) | 4 | 0 | 0 |
| Espey Manufacturing & Electronics Corp. (NYSEAMEX:ESP) | 1 | 1 | 0 |
| SL Industries, Inc. (NYSEAMEX:SLI) | 4 | 1 | 0 |
| Cogo Group Inc (NASDAQ:COGO) | 6 | 0 | 0 |
With the returns demonstrated by our time-tested strategies, retail investors should always watch hedge fund and insider trading sentiment, and Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) is an important part of this process.
