Newport Corporation (NEWP): Hedge Funds and Insiders Are Bearish, What Should You Do? – Wesco Aircraft Holdings Inc (WAIR), DXP Enterprises Inc (DXPE)

Newport Corporation (NASDAQ:NEWP) was in 9 hedge funds’ portfolio at the end of December. NEWP investors should pay attention to a decrease in hedge fund sentiment of late. There were 9 hedge funds in our database with NEWP holdings at the end of the previous quarter.

Newport Corporation (NASDAQ:NEWP)

To most market participants, hedge funds are seen as unimportant, old financial tools of the past. While there are more than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the bigwigs of this club, about 450 funds. It is estimated that this group oversees the majority of the smart money’s total asset base, and by paying attention to their top investments, we have formulated a number of investment strategies that have historically outpaced the market. 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 began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as important, positive insider trading activity is a second way to parse down the investments you’re interested in. There are many stimuli for an insider to downsize shares of his or her company, but only one, very clear reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if investors know where to look (learn more here).

With these “truths” under our belt, it’s important to take a look at the latest action encompassing Newport Corporation (NASDAQ:NEWP).

What does the smart money think about Newport Corporation (NASDAQ:NEWP)?

At the end of the fourth quarter, a total of 9 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully.

Of the funds we track, Chuck Royce’s Royce & Associates had the most valuable position in Newport Corporation (NASDAQ:NEWP), worth close to $40.3 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Joseph A. Jolson of Harvest Capital Strategies, with a $4 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Jim Simons’s Renaissance Technologies, Michael Kaufman’s MAK Capital One and Ken Griffin’s Citadel Investment Group.

Due to the fact that Newport Corporation (NASDAQ:NEWP) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds that elected to cut their entire stakes in Q4. At the top of the heap, Tom Facciola’s Tigershark Partners cut the largest position of the “upper crust” of funds we watch, totaling an estimated $0.6 million in stock. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Newport Corporation (NASDAQ:NEWP)

Insider buying is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time period, Newport Corporation (NASDAQ:NEWP) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Newport Corporation (NASDAQ:NEWP). These stocks are Edgen Group Inc (NYSE:EDG), Wesco Aircraft Holdings Inc (NYSE:WAIR), DXP Enterprises Inc (NASDAQ:DXPE), RTI International Metals, Inc. (NYSE:RTI), and Susser Petroleum Partners LP (NYSE:SUSP). This group of stocks belong to the industrial equipment wholesale industry and their market caps are similar to NEWP’s market cap.