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This Metric Says You Are Smart to Sell ON Semiconductor Corp (NASDAQ:ONNN)

ON Semiconductor Corp (NASDAQ:ONNN) investors should be aware of a decrease in hedge fund interest lately.

ON Semiconductor Corp (NASDAQ:ONNN)

At the moment, there are tons of gauges shareholders can use to track Mr. Market. A couple of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite investment managers can outperform the S&P 500 by a solid amount (see just how much).

Equally as beneficial, bullish insider trading sentiment is a second way to parse down the world of equities. There are lots of stimuli for an executive to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the useful potential of this method if “monkeys” know what to do (learn more here).

Keeping this in mind, it’s important to take a peek at the latest action encompassing ON Semiconductor Corp (NASDAQ:ONNN).

What have hedge funds been doing with ON Semiconductor Corp (NASDAQ:ONNN)?

At the end of the fourth quarter, a total of 15 of the hedge funds we track were long in this stock, a change of -12% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in ON Semiconductor Corp (NASDAQ:ONNN). Citadel Investment Group has a $147 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Eric Bannasch of Cadian Capital, with a $121 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Eric Bannasch’s Cadian Capital, George Soros’s Soros Fund Management and Ron Gutfleish’s Elm Ridge Capital.

Since ON Semiconductor Corp (NASDAQ:ONNN) has faced falling interest from the smart money, it’s easy to see that there is a sect of fund managers that decided to sell off their positions entirely heading into 2013. At the top of the heap, Joel Greenblatt’s Gotham Asset Management cut the largest stake of the “upper crust” of funds we key on, comprising about $2 million in stock., and Jacob Gottlieb of Visium Asset Management was right behind this move, as the fund sold off about $1 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds heading into 2013.

What have insiders been doing with ON Semiconductor Corp (NASDAQ:ONNN)?

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time period, ON Semiconductor Corp (NASDAQ:ONNN) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to ON Semiconductor Corp (NASDAQ:ONNN). These stocks are Freescale Semiconductor Ltd (NYSE:FSL), AU Optronics Corp. (ADR) (NYSE:AUO), Atmel Corporation (NASDAQ:ATML), Mellanox Technologies, Ltd. (NASDAQ:MLNX), and Cavium Inc (NASDAQ:CAVM). This group of stocks are in the semiconductor – broad line industry and their market caps are closest to ONNN’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Freescale Semiconductor Ltd (NYSE:FSL) 7 0 6
AU Optronics Corp. (ADR) (NYSE:AUO) 6 0 0
Atmel Corporation (NASDAQ:ATML) 17 0 3
Mellanox Technologies, Ltd. (NASDAQ:MLNX) 21 0 8
Cavium Inc (NASDAQ:CAVM) 18 0 4

With the returns demonstrated by our tactics, everyday investors must always pay attention to hedge fund and insider trading activity, and ON Semiconductor Corp (NASDAQ:ONNN) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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