Cray Inc. (CRAY): Insiders Aren’t Crazy About It

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Cray Inc. (NASDAQ:CRAY) was in 17 hedge funds’ portfolio at the end of the first quarter of 2013. CRAY has seen a decrease in hedge fund interest of late. There were 19 hedge funds in our database with CRAY holdings at the end of the previous quarter.


In the eyes of most investors, hedge funds are assumed to be underperforming, outdated financial tools of yesteryear. While there are more than 8000 funds in operation today, we at Insider Monkey choose to focus on the leaders of this group, about 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total asset base, and by tracking their best picks, we have unsheathed a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, optimistic insider trading sentiment is another way to break down the stock market universe. There are lots of reasons for an executive to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if piggybackers understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the key action regarding Cray Inc. (NASDAQ:CRAY).

What have hedge funds been doing with Cray Inc. (NASDAQ:CRAY)?

At Q1’s end, a total of 17 of the hedge funds we track held long positions in this stock, a change of -11% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in Cray Inc. (NASDAQ:CRAY), worth close to $13.2 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which held a $7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include John A. Levin’s Levin Capital Strategies, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.

Seeing as Cray Inc. (NASDAQ:CRAY) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their full holdings at the end of the first quarter. At the top of the heap, Peter S. Park’s Park West Asset Management cut the largest position of all the hedgies we key on, comprising about $8 million in stock., and Michael Johnston of Steelhead Partners was right behind this move, as the fund sold off about $3.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds at the end of the first quarter.

Insider trading activity in Cray Inc. (NASDAQ:CRAY)

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time period, Cray Inc. (NASDAQ:CRAY) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Cray Inc. (NASDAQ:CRAY). These stocks are International Business Machines Corp. (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), Teradata Corporation (NYSE:TDC), , and Silicon Graphics International Corp (NASDAQ:SGI). All of these stocks are in the diversified computer systems industry and their market caps match CRAY’s market cap.

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