This Metric Says You Are Smart to Sell Synopsys, Inc. (NASDAQ:SNPS)

Is Synopsys, Inc. (NASDAQ:SNPS) ready to raly soon? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions went down by 2 in recent months.

Earnings Analysis: Synopsys Inc. (NASDAQ:SNPS)If you’d ask most shareholders, hedge funds are seen as unimportant, old investment tools of the past. While there are greater than 8000 funds with their doors open today, we hone in on the top tier of this group, about 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total capital, and by paying attention to their best stock picks, we have formulated a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Just as integral, positive insider trading sentiment is another way to break down the investments you’re interested in. There are lots of stimuli for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this tactic if “monkeys” understand where to look (learn more here).

Consequently, we’re going to take a peek at the recent action encompassing Synopsys, Inc. (NASDAQ:SNPS).

How are hedge funds trading Synopsys, Inc. (NASDAQ:SNPS)?

In preparation for this year, a total of 16 of the hedge funds we track were long in this stock, a change of -11% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes substantially.

Of the funds we track, Panayotis æTakisÆ Sparaggis’s Alkeon Capital Management had the most valuable position in Synopsys, Inc. (NASDAQ:SNPS), worth close to $160 million, comprising 4.7% of its total 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $30 million position; 0% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Andrew Sandler’s Sandler Capital Management, Cliff Asness’s AQR Capital Management and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Because Synopsys, Inc. (NASDAQ:SNPS) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of money managers that slashed their entire stakes in Q4. Interestingly, Neil Chriss’s Hutchin Hill Capital dumped the biggest position of the 450+ funds we key on, worth about $1 million in stock., and David Harding of Winton Capital Management was right behind this move, as the fund dumped about $1 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds in Q4.

How have insiders been trading Synopsys, Inc. (NASDAQ:SNPS)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has experienced transactions within the past half-year. Over the last six-month time period, Synopsys, Inc. (NASDAQ:SNPS) has seen zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s tactics, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Synopsys, Inc. (NASDAQ:SNPS) is an important part of this process.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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