Is Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL) an outstanding stock to buy now? Prominent investors are becoming less hopeful. The number of bullish hedge fund bets shrunk by 1 in recent months.
In the eyes of most stock holders, hedge funds are viewed as underperforming, outdated financial tools of yesteryear. While there are greater than 8000 funds trading today, we at Insider Monkey choose to focus on the masters of this group, close to 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total capital, and by paying attention to their best picks, we have brought to light a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as key, bullish insider trading activity is a second way to break down the financial markets. There are plenty of reasons for an insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).
Consequently, it’s important to take a glance at the recent action encompassing Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL).
How have hedgies been trading Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL)?
At year’s end, a total of 6 of the hedge funds we track were bullish in this stock, a change of -14% from the third quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially.
Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), worth close to $14.4 million, comprising less than 0.1%% of its total 13F portfolio. On Royce & Associates’s heels is Nokomis Capital, managed by Brett Hendrickson, which held a $8.5 million position; 2.9% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include D. E. Shaw’s D E Shaw, Jim Simons’s Renaissance Technologies and Richard Chilton’s Chilton Investment Company.
Seeing as Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL) has witnessed a declination in interest from the entirety of the hedge funds we track, we can see that there was a specific group of money managers that decided to sell off their full holdings at the end of the year. It’s worth mentioning that Robert B. Gillam’s McKinley Capital Management sold off the largest position of all the hedgies we monitor, worth about $1.4 million in stock.. John Burbank’s fund, Passport Capital, also said goodbye to its stock, about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds at the end of the year.
What have insiders been doing with Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL)?
Insider buying is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time frame, Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL). These stocks are Trina Solar Limited (ADR) (NYSE:TSL), Actions Semiconductor Co., Ltd. (ADR) (NASDAQ:ACTS), Ultra Clean Holdings Inc (NASDAQ:UCTT), NVE Corporation (NASDAQ:NVEC), and MaxLinear, Inc. (NYSE:MXL). This group of stocks are the members of the semiconductor – specialized industry and their market caps are similar to AOSL’s market cap.