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Should You Avoid Accuray Incorporated (ARAY)?: GenMark Diagnostics, Inc (GNMK), Natus Medical Inc (BABY)

Accuray Incorporated (NASDAQ:ARAY) was in 13 hedge funds’ portfolio at the end of the fourth quarter of 2012. ARAY has experienced a decrease in activity from the world’s largest hedge funds in recent months. There were 13 hedge funds in our database with ARAY holdings at the end of the previous quarter.

Accuray Incorporated (NASDAQ:ARAY)

In the 21st century investor’s toolkit, there are plenty of gauges market participants can use to track stocks. Two of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the broader indices by a very impressive margin (see just how much).

Just as key, optimistic insider trading activity is another way to break down the investments you’re interested in. There are a number of reasons for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this method if “monkeys” understand what to do (learn more here).

Consequently, we’re going to take a peek at the recent action surrounding Accuray Incorporated (NASDAQ:ARAY).

How have hedgies been trading Accuray Incorporated (NASDAQ:ARAY)?

At year’s end, a total of 13 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.

Of the funds we track, John Burbank’s Passport Capital had the largest position in Accuray Incorporated (NASDAQ:ARAY), worth close to $26 million, comprising 1% of its total 13F portfolio. On Passport Capital’s heels is Phill Gross and Robert Atchinson of Adage Capital Management, with a $12 million position; the fund has 0% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, James E. Flynn’s Deerfield Management and SAC Subsidiary’s CR Intrinsic Investors.

Judging by the fact that Accuray Incorporated (NASDAQ:ARAY) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there exists a select few money managers that elected to cut their positions entirely at the end of the year. It’s worth mentioning that Jacob Gottlieb’s Visium Asset Management dropped the largest investment of the 450+ funds we monitor, worth about $4 million in stock., and JΘr⌠me Pfund and Michael Sj÷str÷m of Sectoral Asset Management was right behind this move, as the fund cut about $4 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Accuray Incorporated (NASDAQ:ARAY)?

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, Accuray Incorporated (NASDAQ:ARAY) has experienced 2 unique insiders purchasing, and 6 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 Accuray Incorporated (NASDAQ:ARAY). These stocks are GenMark Diagnostics, Inc (NASDAQ:GNMK), Natus Medical Inc (NASDAQ:BABY), Navidea Biopharmaceuticals Inc (NYSEAMEX:NAVB), Syneron Medical Ltd. (NASDAQ:ELOS), and PhotoMedex Inc (NASDAQ:PHMD). This group of stocks are the members of the medical appliances & equipment industry and their market caps resemble ARAY’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
GenMark Diagnostics, Inc (NASDAQ:GNMK) 7 0 6
Natus Medical Inc (NASDAQ:BABY) 15 1 5
Navidea Biopharmaceuticals Inc (NYSEAMEX:NAVB) 3 6 1
Syneron Medical Ltd. (NASDAQ:ELOS) 12 0 0
PhotoMedex Inc (NASDAQ:PHMD) 4 0 2

With the returns shown by the aforementioned studies, retail investors should always pay attention to hedge fund and insider trading activity, and Accuray Incorporated (NASDAQ:ARAY) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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