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SanDisk Corporation (SNDK): Insiders Are Dumping, Should You?

SanDisk Corporation (NASDAQ:SNDK) was in 47 hedge funds’ portfolio at the end of December. SNDK has seen an increase in enthusiasm from smart money lately. There were 45 hedge funds in our database with SNDK holdings at the end of the previous quarter. At the same time, Lazard has lifted the price target and estimates for SanDisk Corporation (NASDAQ:SNDK).

SanDisk Corporation (NASDAQ:SNDK)

In the 21st century investor’s toolkit, there are a multitude of methods investors can use to monitor Mr. Market. A couple of the most useful are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can beat their index-focused peers by a very impressive amount (see just how much).

Just as beneficial, bullish insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are a number of motivations for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this method if “monkeys” know where to look (learn more here).

With all of this in mind, let’s take a peek at the recent action regarding SanDisk Corporation (NASDAQ:SNDK).

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

Heading into 2013, a total of 47 of the hedge funds we track were bullish in this stock, a change of 4% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially.

According to our comprehensive database, Sandy Nairn’s Edinburgh Partners had the biggest position in SanDisk Corporation (NASDAQ:SNDK), worth close to $196.2 million, comprising 11.1% of its total 13F portfolio. On Edinburgh Partners’s heels is Viking Global, managed by Andreas Halvorsen, which held a $195 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Michael Lowenstein’s Kensico Capital, Rob Citrone’s Discovery Capital Management and D. E. Shaw’s D E Shaw.

Consequently, key hedge funds were breaking ground themselves. Andor Capital Management, managed by Daniel Benton, established the biggest position in SanDisk Corporation (NASDAQ:SNDK). Andor Capital Management had 32.6 million invested in the company at the end of the quarter. Ryan Frick and Oliver Evans’s Dorsal Capital Management also initiated a $30.5 million position during the quarter. The other funds with brand new SNDK positions are Jim Chanos’s Kynikos, Jeffrey Vinik’s Vinik Asset Management, and Michael Messner’s Seminole Capital (Investment Mgmt).

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

Insider buying is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, SanDisk Corporation (NASDAQ:SNDK) has seen zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

Let’s also take a look at 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 are the members of the data storage devices industry and their market caps match SNDK’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Brocade Communications Systems, Inc. (NASDAQ:BRCD) 21 0 3
EMC Corporation (NYSE:EMC) 58 1 6
Western Digital Corp. (NASDAQ:WDC) 30 0 9
NetApp Inc. (NASDAQ:NTAP) 49 0 4
Seagate Technology PLC (NASDAQ:STX) 22 0 18

With the returns exhibited by Insider Monkey’s strategies, retail investors should always watch hedge fund and insider trading activity, and SanDisk Corporation (NASDAQ:SNDK) is no exception.

Click here to learn why you should track hedge funds

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