Cisco Systems, Inc. (NASDAQ:CSCO) was in 61 hedge funds’ portfolio at the end of the first quarter of 2013. CSCO has experienced a decrease in support from the world’s most elite money managers lately. There were 65 hedge funds in our database with CSCO holdings at the end of the previous quarter.
To most traders, hedge funds are assumed to be worthless, old investment vehicles of years past. While there are greater than 8000 funds in operation at present, we look at the moguls of this group, close to 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total capital, and by monitoring their highest performing stock picks, we have unsheathed a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 23.3 percentage points in 8 months (see the details here).
Equally as important, bullish insider trading activity is another way to break down the world of equities. There are lots of incentives for a corporate insider to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if shareholders understand where to look (learn more here).
Consequently, let’s take a look at the recent action surrounding Cisco Systems, Inc. (NASDAQ:CSCO).
How have hedgies been trading Cisco Systems, Inc. (NASDAQ:CSCO)?
At the end of the first quarter, a total of 61 of the hedge funds we track held long positions in this stock, a change of -6% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.
Of the funds we track, Donald Yacktman’s Yacktman Asset Management had the most valuable position in Cisco Systems, Inc. (NASDAQ:CSCO), worth close to $1.0965 billion, comprising 5.6% of its total 13F portfolio. On Yacktman Asset Management’s heels is Jean-Marie Eveillard of First Eagle Investment Management, with a $880.6 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Ken Fisher’s Fisher Asset Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and Kerr Neilson’s Platinum Asset Management.
Since Cisco Systems, Inc. (NASDAQ:CSCO) has witnessed bearish sentiment from the smart money, it’s safe to say that there exists a select few funds who sold off their full holdings in Q1. It’s worth mentioning that Bain Capital’s Brookside Capital dumped the biggest position of the “upper crust” of funds we track, valued at about $124.4 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund said goodbye to about $117.5 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 4 funds in Q1.
What do corporate executives and insiders think about Cisco Systems, Inc. (NASDAQ:CSCO)?
Insider buying is most useful when the company in focus has experienced transactions within the past six months. Over the latest half-year time frame, Cisco Systems, Inc. (NASDAQ:CSCO) has seen zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).
With the returns shown by our time-tested strategies, retail investors must always monitor hedge fund and insider trading sentiment, and Cisco Systems, Inc. (NASDAQ:CSCO) is no exception.