Cogo Group Inc (COGO): Are Hedge Funds Right About This Stock?

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Cogo Group Inc (NASDAQ:COGO) has experienced an increase in hedge fund interest recently.

According to most traders, hedge funds are assumed to be slow, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open at the moment, we choose to focus on the top tier of this group, about 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total asset base, and by watching their best picks, we have formulated a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Chuck Royce

Just as important, positive insider trading sentiment is a second way to break down the world of equities. As the old adage goes: there are plenty of stimuli for a bullish insider to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this strategy if “monkeys” know where to look (learn more here).

Consequently, let’s take a gander at the key action surrounding Cogo Group Inc (NASDAQ:COGO).

How have hedgies been trading Cogo Group Inc (NASDAQ:COGO)?

Heading into Q2, a total of 8 of the hedge funds we track were long in this stock, a change of 14% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Christopher Zepf and Brian Thonn’s Kingdom Ridge Capital had the biggest position in Cogo Group Inc (NASDAQ:COGO), worth close to $3 million, comprising 1.1% of its total 13F portfolio. On Kingdom Ridge Capital’s heels is Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk of GRT Capital Partners, with a $0.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Stuart Peterson’s Artis Capital Management, Chuck Royce’s Royce & Associates and Jim Simons’s Renaissance Technologies.

As aggregate interest increased, key money managers have been driving this bullishness. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, initiated the most outsized position in Cogo Group Inc (NASDAQ:COGO). Algert Coldiron Investors had 0.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter.

What do corporate executives and insiders think about Cogo Group Inc (NASDAQ:COGO)?

Insider buying is at its handiest when the company in focus has experienced transactions within the past six months. Over the last 180-day time frame, Cogo Group Inc (NASDAQ:COGO) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Cogo Group Inc (NASDAQ:COGO). These stocks are RF Industries, Ltd. (NASDAQ:RFIL), Jinpan International Limited (NASDAQ:JST), SL Industries, Inc. (NYSEAMEX:SLI), Espey Manufacturing & Electronics Corp. (NYSEAMEX:ESP), and Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP). All of these stocks are in the diversified electronics industry and their market caps resemble COGO’s market cap.

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