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Western Digital Corp. (NASDAQ:WDC): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Western Digital Corp. (NASDAQ:WDC) investors should be aware of an increase in hedge fund interest in recent months.

In the financial world, there are many methods investors can use to monitor their holdings. A pair of the most underrated 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 best money managers can trounce the market by a solid amount (see just how much).

Equally as key, bullish insider trading sentiment is a second way to break down the stock market universe. There are lots of stimuli for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this method if shareholders know where to look (learn more here).

Keeping this in mind, we’re going to take a glance at the recent action surrounding Western Digital Corp. (NASDAQ:WDC).

How have hedgies been trading Western Digital Corp. (NASDAQ:WDC)?

At the end of the fourth quarter, a total of 30 of the hedge funds we track were bullish in this stock, a change of 3% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully.

Of the funds we track, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital had the largest position in Western Digital Corp. (NASDAQ:WDC), worth close to $283 million, accounting for 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which held a $107 million position; 5.8% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Curtis Macnguyen’s Ivory Capital (Investment Mgmt), Ken Griffin’s Citadel Investment Group and John Hurley’s Cavalry Asset Management.

As one would reasonably expect, key hedge funds have been driving this bullishness. Ivory Capital (Investment Mgmt), managed by Curtis Macnguyen, established the most valuable position in Western Digital Corp. (NASDAQ:WDC). Ivory Capital (Investment Mgmt) had 104 million invested in the company at the end of the quarter. David Einhorn’s Greenlight Capital also initiated a $25 million position during the quarter. The following funds were also among the new WDC investors: Ken Heebner’s Capital Growth Management, Michael Messner’s Seminole Capital (Investment Mgmt), and Neil Chriss’s Hutchin Hill Capital.

How have insiders been trading Western Digital Corp. (NASDAQ:WDC)?

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past 180 days. Over the last half-year time frame, Western Digital Corp. (NASDAQ:WDC) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

With the returns demonstrated by the aforementioned studies, everyday investors should always monitor hedge fund and insider trading sentiment, and Western Digital Corp. (NASDAQ:WDC) shareholders fit into this picture quite nicely.

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

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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