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This Metric Says You Are Smart to Buy Cognex Corporation (CGNX)

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Is it smart to be bullish on Cognex Corporation (NASDAQ:CGNX)?

In the eyes of many of your fellow readers, hedge funds are assumed to be bloated, old investment tools of an era lost to time. Although there are In excess of 8,000 hedge funds trading in present day, this site focuses on the leaders of this group, around 525 funds. It is assumed that this group oversees the lion’s share of the smart money’s total assets, and by keeping an eye on their highest performing stock picks, we’ve come up with 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 per annum 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 33 percentage points in 11 months (find the details here).

Equally as crucial, bullish insider trading activity is a second way to analyze the marketplace. There are a number of reasons for an upper level exec to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this tactic if investors understand where to look (learn more here).

Cognex Corporation (NASDAQ:CGNX)

What’s more, let’s examine the latest info surrounding Cognex Corporation (NASDAQ:CGNX).

Hedge fund activity in Cognex Corporation (NASDAQ:CGNX)

In preparation for the third quarter, a total of 11 of the hedge funds we track were long in this stock, a change of 10% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully.

Out of the hedge funds we follow, Chuck Royce’s Royce & Associates had the biggest position in Cognex Corporation (NASDAQ:CGNX), worth close to $166.4 million, comprising 0.5% of its total 13F portfolio. The second largest stake is held by Andrew Sandler of Sandler Capital Management, with a $27.4 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Jim Simons’s Renaissance Technologies, Gregory A. Weaver’s Invicta Capital Management and Joel Greenblatt’s Gotham Asset Management.

With a general bullishness amongst the titans, specific money managers have jumped into Cognex Corporation (NASDAQ:CGNX) headfirst. Royce & Associates, managed by Chuck Royce, created the most outsized position in Cognex Corporation (NASDAQ:CGNX). Royce & Associates had 166.4 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $27.4 million position during the quarter. The other funds with brand new CGNX positions are Jim Simons’s Renaissance Technologies, Gregory A. Weaver’s Invicta Capital Management, and Joel Greenblatt’s Gotham Asset Management.

Insider trading activity in Cognex Corporation (NASDAQ:CGNX)

Insider buying made by high-level executives is most useful when the company in question has experienced transactions within the past half-year. Over the last 180-day time frame, Cognex Corporation (NASDAQ:CGNX) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Cognex Corporation (NASDAQ:CGNX). These stocks are Coherent, Inc. (NASDAQ:COHR), Geospace Technologies Corp (NASDAQ:GEOS), Ixia (NASDAQ:XXIA), Curtiss-Wright Corp. (NYSE:CW), and Itron, Inc. (NASDAQ:ITRI). This group of stocks are in the scientific & technical instruments industry and their market caps are similar to CGNX’s market cap.

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