SanDisk Corporation (SNDK): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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SanDisk Corporation (NASDAQ:SNDK) was in 54 hedge funds’ portfolio at the end of the first quarter of 2013. SNDK has experienced an increase in enthusiasm from smart money of late. There were 50 hedge funds in our database with SNDK holdings at the end of the previous quarter.

SanDisk Corporation (NASDAQ:SNDK)

According to most shareholders, hedge funds are seen as worthless, outdated investment vehicles of the past. While there are over 8000 funds trading at the moment, we at Insider Monkey hone in on the top tier of this group, about 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by watching their best equity investments, we have determined a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, bullish insider trading sentiment is a second way to parse down the investments you’re interested in. Obviously, there are a variety of stimuli for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the valuable potential of this strategy if “monkeys” understand where to look (learn more here).

Now, we’re going to take a look at the latest action surrounding SanDisk Corporation (NASDAQ:SNDK).

How are hedge funds trading SanDisk Corporation (NASDAQ:SNDK)?

In preparation for this quarter, a total of 54 of the hedge funds we track were bullish in this stock, a change of 8% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Kensico Capital, managed by Michael Lowenstein, holds the most valuable position in SanDisk Corporation (NASDAQ:SNDK). Kensico Capital has a $261.1 million position in the stock, comprising 6.9% of its 13F portfolio. The second largest stake is held by Edinburgh Partners, managed by Sandy Nairn, which held a $222.7 million position; the fund has 13.6% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Panayotis Takis Sparaggis’s Alkeon Capital Management, Rob Citrone’s Discovery Capital Management and Donald Chiboucis’s Columbus Circle Investors.

Consequently, some big names were breaking ground themselves. Columbus Circle Investors, managed by Donald Chiboucis, assembled the largest position in SanDisk Corporation (NASDAQ:SNDK). Columbus Circle Investors had 134 million invested in the company at the end of the quarter. John Lykouretzos’s Hoplite Capital Management also initiated a $73.4 million position during the quarter. The following funds were also among the new SNDK investors: Curtis Macnguyen’s Ivory Capital (Investment Mgmt), Clint Carlson’s Carlson Capital, and Sean Cullinan’s Point State Capital.

How are insiders trading SanDisk Corporation (NASDAQ:SNDK)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time period, SanDisk Corporation (NASDAQ:SNDK) has experienced zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to SanDisk Corporation (NASDAQ:SNDK). These stocks are Brocade Communications Systems, Inc. (NASDAQ:BRCD), EMC Corporation (NYSE:EMC), Western Digital Corp. (NASDAQ:WDC), NetApp Inc. (NASDAQ:NTAP), and Seagate Technology PLC (NASDAQ:STX). This group of stocks belong to the data storage devices industry and their market caps match SNDK’s market cap.

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