Is Avago Technologies Ltd (NASDAQ:AVGO) a bargain? The smart money is in a bullish mood. The number of long hedge fund positions increased by 10 recently.
To most investors, hedge funds are perceived as worthless, old financial tools of the past. While there are more than 8000 funds trading at present, we hone in on the masters of this group, about 450 funds. It is estimated that this group has its hands on the lion’s share of the smart money’s total capital, and by paying attention to their best stock picks, we have unearthed a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 25 percentage points in 6.5 month (check out a sample of our picks).
Equally as beneficial, optimistic insider trading activity is a second way to parse down the investments you’re interested in. As the old adage goes: there are lots of incentives for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this tactic if shareholders understand what to do (learn more here).
Now, let’s take a glance at the latest action regarding Avago Technologies Ltd (NASDAQ:AVGO).
How are hedge funds trading Avago Technologies Ltd (NASDAQ:AVGO)?
In preparation for this year, a total of 33 of the hedge funds we track were bullish in this stock, a change of 43% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially.
Of the funds we track, Maverick Capital, managed by Lee Ainslie, holds the most valuable position in Avago Technologies Ltd (NASDAQ:AVGO). Maverick Capital has a $180 million billion position in the stock, comprising 2.7% of its 13F portfolio. The second largest stake is held by SAC Capital Advisors, managed by Steven Cohen, which held a $144 million position; 0.6% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include Ken Griffin’s Citadel Investment Group, Richard Chilton’s Chilton Investment Company and Donald Chiboucis’s Columbus Circle Investors.
Consequently, key hedge funds have been driving this bullishness. Carlson Capital, managed by Clint Carlson, created the most outsized position in Avago Technologies Ltd (NASDAQ:AVGO). Carlson Capital had 38 million invested in the company at the end of the quarter. Nick Niell’s Arrowgrass Capital Partners also initiated a $18 million position during the quarter. The following funds were also among the new avgo investors: , Alec Litowitz and Ross Laser’s Magnetar Capital, and Mark Kingdon’s Kingdon Capital.
What have insiders been doing with Avago Technologies Ltd (NASDAQ:AVGO)?
Insider purchases made by high-level executives is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time period, Avago Technologies Ltd (NASDAQ:AVGO) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
With the results demonstrated by the aforementioned time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Avago Technologies Ltd (NASDAQ:AVGO) applies perfectly to this mantra.
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