Do Hedge Funds and Insiders Love Advanced Energy Industries, Inc. (AEIS)?

Is Advanced Energy Industries, Inc. (NASDAQ:AEIS) an excellent investment right now? Investors who are in the know are turning less bullish. The number of bullish hedge fund bets went down by 1 in recent months.

In the eyes of most investors, hedge funds are viewed as slow, old investment tools of years past. While there are more than 8000 funds in operation at the moment, we at Insider Monkey hone in on the aristocrats of this group, about 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total asset base, and by monitoring their top investments, we have determined a number of investment strategies that have historically outperformed Mr. 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, positive insider trading sentiment is a second way to break down the stock market universe. There are plenty of motivations for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).

Now, let’s take a glance at the recent action regarding Advanced Energy Industries, Inc. (NASDAQ:AEIS).

Hedge fund activity in Advanced Energy Industries, Inc. (NASDAQ:AEIS)

Heading into Q2, a total of 13 of the hedge funds we track were bullish in this stock, a change of -7% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly.

Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in Advanced Energy Industries, Inc. (NASDAQ:AEIS), worth close to $52.3 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $10.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include Jim Simons’s Renaissance Technologies, Joel Greenblatt’s Gotham Asset Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Because Advanced Energy Industries, Inc. (NASDAQ:AEIS) has witnessed a declination in interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds who were dropping their full holdings in Q1. It’s worth mentioning that Matthew Hulsizer’s PEAK6 Capital Management dropped the largest investment of the 450+ funds we watch, valued at about $0.4 million in call options, and John Burbank of Passport Capital was right behind this move, as the fund sold off about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds in Q1.

How are insiders trading Advanced Energy Industries, Inc. (NASDAQ:AEIS)?

Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, Advanced Energy Industries, Inc. (NASDAQ:AEIS) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Advanced Energy Industries, Inc. (NASDAQ:AEIS). These stocks are Methode Electronics Inc. (NYSE:MEI), Power One Inc (NASDAQ:PWER), Sanmina Corp (NASDAQ:SANM), Nam Tai Electronics, Inc. (NYSE:NTE), and Encore Wire Corporation (NASDAQ:WIRE). This group of stocks are in the diversified electronics industry and their market caps match AEIS’s market cap.