Is iRobot Corporation (NASDAQ:IRBT) a healthy stock for your portfolio? Prominent investors are getting less optimistic. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience.
In the financial world, there are dozens of gauges market participants can use to analyze stocks. Two of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite money managers can outpace the S&P 500 by a solid amount (see just how much).
Equally as integral, optimistic insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are lots of reasons for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this method if “monkeys” know where to look (learn more here).
With these “truths” under our belt, it’s important to take a peek at the recent action surrounding iRobot Corporation (NASDAQ:IRBT).
How are hedge funds trading iRobot Corporation (NASDAQ:IRBT)?
In preparation for this year, a total of 8 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly.
Of the funds we track, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management had the most valuable position in iRobot Corporation (NASDAQ:IRBT), worth close to $16.6 million, comprising 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $6.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Joel Greenblatt’s Gotham Asset Management, Israel Englander’s Millennium Management and Phill Gross and Robert Atchinson’s Adage Capital Management.
Judging by the fact that iRobot Corporation (NASDAQ:IRBT) has faced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedgies who were dropping their positions entirely at the end of the year. Interestingly, Steven Cohen’s SAC Capital Advisors said goodbye to the biggest position of all the hedgies we watch, worth about $0.4 million in stock., and David Costen Haley of HBK Investments was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading iRobot Corporation (NASDAQ:IRBT)?
Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, iRobot Corporation (NASDAQ:IRBT) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to iRobot Corporation (NASDAQ:IRBT). These stocks are Appliance Recycling Centers of America (NASDAQ:ARCI), Whirlpool Corporation (NYSE:WHR), and National Presto Industries Inc. (NYSE:NPK). This group of stocks are in the appliances industry and their market caps match IRBT’s market cap.