Universal Display Corporation (PANL): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

Universal Display Corporation (NASDAQ:PANL) was in 13 hedge funds’ portfolio at the end of the fourth quarter of 2012. PANL has experienced a decrease in activity from the world’s largest hedge funds of late. There were 17 hedge funds in our database with PANL holdings at the end of the previous quarter. This is important, because just today Oppenheimer announced about raising the rank of Universal Display Corporation (NASDAQ:PANL).

According to most stock holders, hedge funds are perceived as unimportant, old financial vehicles of years past. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the top tier of this club, around 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total capital, and by watching their highest performing stock picks, we have unsheathed a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as important, bullish insider trading activity is a second way to parse down the world of equities. As the old adage goes: there are lots of reasons for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

Consequently, it’s important to take a gander at the key action encompassing Universal Display Corporation (NASDAQ:PANL).

What have hedge funds been doing with Universal Display Corporation (NASDAQ:PANL)?

At year’s end, a total of 13 of the hedge funds we track were long in this stock, a change of -24% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes substantially.

According to our comprehensive database, Discovery Capital Management, managed by Rob Citrone, holds the most valuable position in Universal Display Corporation (NASDAQ:PANL). Discovery Capital Management has a $160.3 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is GLG Partners, managed by Noam Gottesman, which held a $10.3 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Scott Burney’s Bluefin Investment Management, Eric Bannasch’s Cadian Capital and John A. Levin’s Levin Capital Strategies.

Because Universal Display Corporation (NASDAQ:PANL) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers who were dropping their full holdings last quarter. Interestingly, John Hurley’s Cavalry Asset Management dumped the biggest stake of all the hedgies we watch, comprising close to $24.9 million in stock., and Donald Chiboucis of Columbus Circle Investors was right behind this move, as the fund cut about $15.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 4 funds last quarter.

What have insiders been doing with Universal Display Corporation (NASDAQ:PANL)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time period, Universal Display Corporation (NASDAQ:PANL) has experienced 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Universal Display Corporation (NASDAQ:PANL). These stocks are Stratasys, Ltd. (NASDAQ:SSYS), Nice Systems Ltd (ADR) (NASDAQ:NICE), Electronics For Imaging, Inc. (NASDAQ:EFII), Logitech International SA (USA) (NASDAQ:LOGI), and Synaptics, Incorporated (NASDAQ:SYNA). All of these stocks are in the computer peripherals industry and their market caps match PANL’s market cap.