Is Mindspeed Technologies, Inc. (NASDAQ:MSPD) a cheap investment today? Prominent investors are in a bearish mood. The number of long hedge fund positions shrunk by 1 lately.
To most market participants, hedge funds are viewed as underperforming, old financial tools of the past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey look at the crème de la crème of this group, around 450 funds. It is widely believed that this group has its hands on most of all hedge funds’ total capital, and by paying attention to their top picks, we have formulated a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as beneficial, positive insider trading activity is a second way to parse down the marketplace. Just as you’d expect, there are many stimuli for an insider to sell shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this tactic if shareholders understand where to look (learn more here).
Keeping this in mind, let’s take a glance at the latest action encompassing Mindspeed Technologies, Inc. (NASDAQ:MSPD).
What have hedge funds been doing with Mindspeed Technologies, Inc. (NASDAQ:MSPD)?
Heading into Q2, a total of 7 of the hedge funds we track were long in this stock, a change of -13% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly.
According to our comprehensive database, Chuck Royce’s Royce & Associates had the most valuable position in Mindspeed Technologies, Inc. (NASDAQ:MSPD), worth close to $7.6 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Mark N. Diker of Diker Management, with a $6.1 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Israel Englander’s Millennium Management, Stuart Peterson’s Artis Capital Management and D. E. Shaw’s D E Shaw.
Due to the fact that Mindspeed Technologies, Inc. (NASDAQ:MSPD) has faced a declination in interest from hedge fund managers, we can see that there exists a select few funds who sold off their entire stakes at the end of the first quarter. Intriguingly, Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest stake of the “upper crust” of funds we monitor, totaling close to $0.4 million in stock.. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds at the end of the first quarter.
How have insiders been trading Mindspeed Technologies, Inc. (NASDAQ:MSPD)?
Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time period, Mindspeed Technologies, Inc. (NASDAQ:MSPD) has seen zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Mindspeed Technologies, Inc. (NASDAQ:MSPD). These stocks are Daqo New Energy Corp (NYSE:DQ), Cohu, Inc. (NASDAQ:COHU), Cascade Microtech, Inc. (NASDAQ:CSCD), Oclaro, Inc. (NASDAQ:OCLR), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks are the members of the semiconductor equipment & materials industry and their market caps match MSPD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Daqo New Energy Corp (NYSE:DQ) | 1 | 0 | 0 |
| Cohu, Inc. (NASDAQ:COHU) | 3 | 0 | 1 |
| Cascade Microtech, Inc. (NASDAQ:CSCD) | 1 | 1 | 5 |
| Oclaro, Inc. (NASDAQ:OCLR) | 6 | 0 | 2 |
| Axcelis Technologies Inc (NASDAQ:ACLS) | 9 | 0 | 3 |
With the results exhibited by Insider Monkey’s tactics, retail investors must always keep an eye on hedge fund and insider trading activity, and Mindspeed Technologies, Inc. (NASDAQ:MSPD) shareholders fit into this picture quite nicely.
