Fabrinet (FN): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Is Fabrinet (NYSE:FN) ready to raly soon? Money managers are getting more optimistic. The number of long hedge fund bets advanced by 4 recently.

In today’s marketplace, there are plenty of gauges market participants can use to analyze Mr. Market. A pair of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can trounce the market by a significant margin (see just how much).

Fabrinet (NYSE:FN)

Equally as beneficial, optimistic insider trading sentiment is another way to parse down the financial markets. Just as you’d expect, there are plenty of motivations for an insider to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this tactic if investors know where to look (learn more here).

Consequently, it’s important to take a look at the latest action encompassing Fabrinet (NYSE:FN).

How are hedge funds trading Fabrinet (NYSE:FN)?

At year’s end, a total of 8 of the hedge funds we track were long in this stock, a change of 100% from the third quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.

Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Fabrinet (NYSE:FN), worth close to $38.6 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Manatuck Hill Partners, managed by Mark Broach, which held a $2 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Ken Griffin’s Citadel Investment Group, Joseph A. Jolson’s Harvest Capital Strategies and Israel Englander’s Millennium Management.

As aggregate interest increased, some big names were leading the bulls’ herd. Manatuck Hill Partners, managed by Mark Broach, created the biggest position in Fabrinet (NYSE:FN). Manatuck Hill Partners had 2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $1.2 million investment in the stock during the quarter. The other funds with brand new FN positions are D. E. Shaw’s D E Shaw and Philip Hempleman’s Ardsley Partners.

Insider trading activity in Fabrinet (NYSE:FN)

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time frame, Fabrinet (NYSE:FN) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Fabrinet (NYSE:FN). These stocks are Koss Corporation (NASDAQ:KOSS), Emerson Radio Corp (NYSEAMEX:MSN), Harman International Industries Inc./DE/ (NYSE:HAR), Spectrum Brands Holdings, Inc. (NYSE:SPB), and Universal Electronics Inc (NASDAQ:UEIC). All of these stocks are in the electronic equipment industry and their market caps are closest to FN’s market cap.