Is Geospace Technologies Corp (GEOS) Going to Burn These Hedge Funds?

Page 1 of 2

Should Geospace Technologies Corp (NASDAQ:GEOS) investors track the following data?

If you were to ask many market players, hedge funds are perceived as delayed, outdated investment tools of a period lost to current times. Although there are over 8,000 hedge funds in operation currently, this site focuses on the top tier of this group, around 525 funds. Analysts calculate that this group controls the lion’s share of the hedge fund industry’s total assets, and by monitoring their highest quality investments, we’ve come up with a number of investment strategies that have historically outperformed the S&P 500. 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 topped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as necessary, optimistic insider trading activity is a second way to look at the financial markets. There are a variety of motivations for an insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the impressive potential of this method if shareholders understand where to look (learn more here).

Geospace Technologies Corp (NASDAQ:GEOS)

Now that that’s out of the way, let’s examine the newest info for Geospace Technologies Corp (NASDAQ:GEOS).

How have hedgies been trading Geospace Technologies Corp (NASDAQ:GEOS)?

At Q2’s end, a total of 14 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly.

When using filings from the hedgies we track, Millennium Management, managed by Israel Englander, holds the largest position in Geospace Technologies Corp (NASDAQ:GEOS). Millennium Management has a $29.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Driehaus Capital, managed by Richard Driehaus, which held a $4.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Matt Sirovich and Jeremy Mindich’s Scopia Capital, Glenn Russell Dubin’s Highbridge Capital Management and Chuck Royce’s Royce & Associates.

Judging by the fact that Geospace Technologies Corp (NASDAQ:GEOS) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of funds who sold off their entire stakes in Q1. Intriguingly, Drew Cupps’s Cupps Capital Management dumped the biggest stake of all the hedgies we key on, valued at about $17.6 million in stock. Ken Heebner’s fund, Capital Growth Management, also dropped its stock, about $17.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Geospace Technologies Corp (NASDAQ:GEOS)

Legal insider trading, particularly when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the last half-year time period, Geospace Technologies Corp (NASDAQ:GEOS) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Geospace Technologies Corp (NASDAQ:GEOS). These stocks are ESCO Technologies Inc. (NYSE:ESE), Cubic Corporation (NYSE:CUB), Curtiss-Wright Corp. (NYSE:CW), Ixia (NASDAQ:XXIA), and Coherent, Inc. (NASDAQ:COHR). This group of stocks are in the scientific & technical instruments industry and their market caps resemble GEOS’s market cap.

Page 1 of 2