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Hedge Funds Aren’t Crazy About II-VI, Inc. (IIVI) Anymore

II-VI, Inc. (NASDAQ:IIVI) was in 10 hedge funds’ portfolio at the end of March. IIVI investors should pay attention to a decrease in hedge fund sentiment recently. There were 10 hedge funds in our database with IIVI positions at the end of the previous quarter.

To most market participants, hedge funds are seen as slow, old financial tools of the past. While there are greater than 8000 funds with their doors open at the moment, we look at the top tier of this club, close to 450 funds. It is estimated that this group controls the majority of all hedge funds’ total asset base, and by watching their best investments, we have formulated a few investment strategies that have historically outstripped the broader indices. 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 (explore the details and some picks here).

Equally as integral, bullish insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are plenty of reasons for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).

Consequently, we’re going to take a peek at the latest action surrounding II-VI, Inc. (NASDAQ:IIVI).

What does the smart money think about II-VI, Inc. (NASDAQ:IIVI)?

Heading into Q2, a total of 10 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly.

II-VI, Inc. (NASDAQ:IIVI)According to our comprehensive database, SG Capital Management, managed by Ken Grossman and Glen Schneider, holds the most valuable position in II-VI, Inc. (NASDAQ:IIVI). SG Capital Management has a $14.2 million position in the stock, comprising 7% of its 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $4.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedgies that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

Judging by the fact that II-VI, Inc. (NASDAQ:IIVI) has faced a declination in interest from the smart money, we can see that there lies a certain “tier” of funds who were dropping their entire stakes at the end of the first quarter. Interestingly, Gregory A. Weaver’s Invicta Capital Management said goodbye to the biggest position of the 450+ funds we key on, valued at close to $10.6 million in stock.. Joel Greenblatt’s fund, Gotham Asset Management, also cut its stock, about $0.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading II-VI, Inc. (NASDAQ:IIVI)?

Bullish insider trading is particularly usable when the company in focus has seen transactions within the past half-year. Over the last six-month time frame, II-VI, Inc. (NASDAQ:IIVI) has experienced zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to II-VI, Inc. (NASDAQ:IIVI). These stocks are MTS Systems Corporation (NASDAQ:MTSC), Analogic Corporation (NASDAQ:ALOG), Cubic Corporation (NYSE:CUB), ESCO Technologies Inc. (NYSE:ESE), and Ion Geophysical Corp (NYSE:IO). This group of stocks are the members of the scientific & technical instruments industry and their market caps resemble IIVI’s market cap.