CTS Corporation (NYSE:CTS) was in 8 hedge funds’ portfolio at the end of the first quarter of 2013. CTS shareholders have witnessed an increase in enthusiasm from smart money of late. There were 6 hedge funds in our database with CTS holdings at the end of the previous quarter.
In the eyes of most investors, hedge funds are viewed as underperforming, old investment tools of yesteryear. While there are over 8000 funds trading today, we at Insider Monkey choose to focus on the masters of this club, close to 450 funds. It is widely believed that this group controls most of all hedge funds’ total asset base, and by monitoring their highest performing investments, we have come up with a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 the details here).
Equally as important, positive insider trading activity is a second way to parse down the marketplace. There are a number of motivations for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers understand what to do (learn more here).
Consequently, let’s take a gander at the key action encompassing CTS Corporation (NYSE:CTS).
How are hedge funds trading CTS Corporation (NYSE:CTS)?
At Q1’s end, a total of 8 of the hedge funds we track held long positions in this stock, a change of 33% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, GAMCO Investors, managed by Mario Gabelli, holds the most valuable position in CTS Corporation (NYSE:CTS). GAMCO Investors has a $33.3 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $4.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.
As one would reasonably expect, some big names were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, assembled the biggest position in CTS Corporation (NYSE:CTS). D E Shaw had 0.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.1 million investment in the stock during the quarter.
What have insiders been doing with CTS Corporation (NYSE:CTS)?
Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past 180 days. Over the last half-year time frame, CTS Corporation (NYSE:CTS) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to CTS Corporation (NYSE:CTS). These stocks are Methode Electronics Inc. (NYSE:MEI), KEMET Corporation (NYSE:KEM), Orbotech Ltd. (NASDAQ:ORBK), UniPixel Inc (NASDAQ:UNXL), and Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO). This group of stocks are in the diversified electronics industry and their market caps resemble CTS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Methode Electronics Inc. (NYSE:MEI) | 10 | 3 | 0 |
| KEMET Corporation (NYSE:KEM) | 5 | 1 | 0 |
| Orbotech Ltd. (NASDAQ:ORBK) | 5 | 0 | 0 |
| UniPixel Inc (NASDAQ:UNXL) | 13 | 0 | 7 |
| Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) | 11 | 0 | 0 |
With the returns shown by our tactics, retail investors must always pay attention to hedge fund and insider trading activity, and CTS Corporation (NYSE:CTS) is no exception.
