Brocade Communications Systems, Inc. (NASDAQ:BRCD) investors should be aware of a decrease in hedge fund sentiment in recent months.
According to most traders, hedge funds are viewed as worthless, old investment tools of yesteryear. While there are greater than 8000 funds in operation today, we at Insider Monkey choose to focus on the crème de la crème of this club, close to 450 funds. It is widely believed that this group oversees the lion's share of the hedge fund industry's total capital, and by keeping an eye on their highest performing equity investments, we have determined a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as integral, positive insider trading activity is another way to break down the world of equities. As the old adage goes: there are plenty of motivations for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this method if you know where to look (learn more here).
With these "truths" under our belt, it's important to take a gander at the key action encompassing Brocade Communications Systems, Inc. (NASDAQ:BRCD).
At year's end, a total of 21 of the hedge funds we track were bullish in this stock, a change of -5% from the previous quarter. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings considerably.
According to our comprehensive database, Elliott Management, managed by Paul Singer, holds the most valuable position in Brocade Communications Systems, Inc. (NASDAQ:BRCD). Elliott Management has a $80 million position in the stock, comprising 2.5% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which held a $73 million position; 0.3% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Ken Griffin's Citadel Investment Group, Jim Simons's Renaissance Technologies and David Dreman's Dreman Value Management.
Judging by the fact that Brocade Communications Systems, Inc. (NASDAQ:BRCD) has experienced declining sentiment from the smart money, logic holds that there was a specific group of funds who were dropping their full holdings last quarter. Intriguingly, Ray Dalio's Bridgewater Associates cut the biggest stake of the "upper crust" of funds we watch, totaling an estimated $1 million in stock., and Philippe Jabre of Jabre Capital Partners was right behind this move, as the fund cut about $1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past 180 days. Over the last half-year time frame, Brocade Communications Systems, Inc. (NASDAQ:BRCD) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the results shown by our research, retail investors should always watch hedge fund and insider trading sentiment, and Brocade Communications Systems, Inc. (NASDAQ:BRCD) shareholders fit into this picture quite nicely.
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