Do Hedge Funds and Insiders Love Seagate Technology PLC (STX)?

Seagate Technology PLC (NASDAQ:STX) has seen an increase in enthusiasm from smart money lately.

If you’d ask most market participants, hedge funds are assumed to be worthless, old investment tools of yesteryear. While there are over 8000 funds trading at present, we hone in on the crème de la crème of this club, about 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total asset base, and by keeping an eye on their top equity investments, we have uncovered a few investment strategies that have historically outstripped the market. 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 started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as integral, bullish insider trading sentiment is a second way to break down the financial markets. Just as you’d expect, there are lots of reasons for an upper level exec to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this method if investors understand what to do (learn more here).

With these “truths” under our belt, we’re going to take a glance at the latest action encompassing Seagate Technology PLC (NASDAQ:STX).

How have hedgies been trading Seagate Technology PLC (NASDAQ:STX)?

In preparation for this quarter, a total of 29 of the hedge funds we track held long positions in this stock, a change of 26% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially.

Of the funds we track, David Einhorn’s Greenlight Capital had the largest position in Seagate Technology PLC (NASDAQ:STX), worth close to $197.1 million, comprising 3% of its total 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $134.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Jim Simons’s Renaissance Technologies, David Cohen and Harold Levy’s Iridian Asset Management and Jean-Marie Eveillard’s First Eagle Investment Management.

Consequently, some big names have jumped into Seagate Technology PLC (NASDAQ:STX) headfirst. AQR Capital Management, managed by Cliff Asness, established the largest position in Seagate Technology PLC (NASDAQ:STX). AQR Capital Management had 134.6 million invested in the company at the end of the quarter. Peter Adam Hochfelder’s Brahman Capital also initiated a $36.6 million position during the quarter. The other funds with brand new STX positions are Curtis Macnguyen’s Ivory Capital (Investment Mgmt), Joel Greenblatt’s Gotham Asset Management, and David Costen Haley’s HBK Investments.

Insider trading activity in Seagate Technology PLC (NASDAQ:STX)

Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time frame, Seagate Technology PLC (NASDAQ:STX) has experienced zero unique insiders buying, and 14 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Seagate Technology PLC (NASDAQ:STX). These stocks are Brocade Communications Systems, Inc. (NASDAQ:BRCD), EMC Corporation (NYSE:EMC), Western Digital Corp. (NASDAQ:WDC), NetApp Inc. (NASDAQ:NTAP), and SanDisk Corporation (NASDAQ:SNDK). All of these stocks are in the data storage devices industry and their market caps are similar to STX’s market cap.