Stratasys, Ltd. (NASDAQ:SSYS) has experienced a decrease in enthusiasm from smart money of late.
According to most market participants, hedge funds are viewed as worthless, outdated investment vehicles of the past. While there are more than 8000 funds in operation today, we hone in on the leaders of this club, around 450 funds. It is widely believed that this group controls the majority of the smart money's total capital, and by monitoring their top investments, we have revealed a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as key, optimistic insider trading sentiment is another way to break down the financial markets. There are a number of incentives for an insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Keeping this in mind, it's important to take a glance at the latest action regarding Stratasys, Ltd. (NASDAQ:SSYS).
At the end of the first quarter, a total of 12 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings meaningfully.
When looking at the hedgies we track, Chase Coleman and Feroz Dewan's Tiger Global Management LLC had the most valuable position in Stratasys, Ltd. (NASDAQ:SSYS), worth close to $96.5 million, comprising 1.5% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $21.5 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Drew Cupps's Cupps Capital Management, Richard Driehaus's Driehaus Capital and Ken Griffin's Citadel Investment Group.
Since Stratasys, Ltd. (NASDAQ:SSYS) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds that elected to cut their full holdings at the end of the first quarter. Interestingly, D. E. Shaw's D E Shaw said goodbye to the largest position of all the hedgies we key on, worth an estimated $3.2 million in call options. Ken Griffin's fund, Citadel Investment Group, also dropped its stock, about $1.7 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Bullish insider trading is at its handiest when the company we're looking at has seen transactions within the past six months. Over the latest 180-day time period, Stratasys, Ltd. (NASDAQ:SSYS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to Stratasys, Ltd. (NASDAQ:SSYS). These stocks are Electronics For Imaging, Inc. (NASDAQ:EFII), Logitech International SA (USA) (NASDAQ:LOGI), Synaptics, Incorporated (NASDAQ:SYNA), Universal Display Corporation (NASDAQ:PANL), and Nice Systems Ltd (ADR) (NASDAQ:NICE). This group of stocks belong to the computer peripherals industry and their market caps resemble SSYS's market cap.