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Hollysys Automation Technologies Ltd (HOLI): Are Hedge Funds Right About This Stock?: Zoltek Companies, Inc. (ZOLT), Daktronics, Inc. (DAKT)

Is Hollysys Automation Technologies Ltd (NASDAQ:HOLI) going to take off soon? The best stock pickers are taking a pessimistic view. The number of long hedge fund bets dropped by 1 lately.

Hollysys Automation Technologies Ltd (NASDAQ:HOLI)In the eyes of most market participants, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation at present, we look at the leaders of this group, close to 450 funds. It is widely believed that this group has its hands on most of all hedge funds’ total asset base, and by tracking their best investments, we have revealed a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Equally as key, optimistic insider trading activity is a second way to parse down the world of equities. Just as you’d expect, there are a variety of stimuli for an executive to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this method if “monkeys” know what to do (learn more here).

Consequently, let’s take a glance at the latest action surrounding Hollysys Automation Technologies Ltd (NASDAQ:HOLI).

Hedge fund activity in Hollysys Automation Technologies Ltd (NASDAQ:HOLI)

At the end of the fourth quarter, a total of 5 of the hedge funds we track were bullish in this stock, a change of -17% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.

Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Hollysys Automation Technologies Ltd (NASDAQ:HOLI), worth close to $7 million, comprising 0% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which held a $3 million position; the fund has 0% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Mark Kingdon’s Kingdon Capital, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.

Due to the fact that Hollysys Automation Technologies Ltd (NASDAQ:HOLI) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies who were dropping their full holdings at the end of the year. Interestingly, George Soros’s Soros Fund Management said goodbye to the biggest stake of the “upper crust” of funds we track, worth about $8 million in stock., and John Kleinheinz of Kleinheinz Capital Partners was right behind this move, as the fund sold off about $6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds at the end of the year.

What do corporate executives and insiders think about Hollysys Automation Technologies Ltd (NASDAQ:HOLI)?

Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time frame, Hollysys Automation Technologies Ltd (NASDAQ:HOLI) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Hollysys Automation Technologies Ltd (NASDAQ:HOLI). These stocks are Zoltek Companies, Inc. (NASDAQ:ZOLT), Daktronics, Inc. (NASDAQ:DAKT), GrafTech International Ltd (NYSE:GTI), Powell Industries, Inc. (NASDAQ:POWL), and Altra Holdings, Inc. (NASDAQ:AIMC). This group of stocks belong to the industrial electrical equipment industry and their market caps resemble HOLI’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Zoltek Companies, Inc. (NASDAQ:ZOLT) 9 2 0
Daktronics, Inc. (NASDAQ:DAKT) 10 0 2
GrafTech International Ltd (NYSE:GTI) 21 2 2
Powell Industries, Inc. (NASDAQ:POWL) 6 1 4
Altra Holdings, Inc. (NASDAQ:AIMC) 9 0 3

With the results demonstrated by Insider Monkey’s time-tested strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Hollysys Automation Technologies Ltd (NASDAQ:HOLI) applies perfectly to this mantra.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.