Should You Avoid AVX Corporation (AVX)?

Is AVX Corporation (NYSE:AVX) a bargain? Hedge funds are becoming less confident. The number of bullish hedge fund bets decreased by 4 lately.

In the eyes of most investors, hedge funds are seen as worthless, outdated investment tools of yesteryear. While there are over 8000 funds trading at present, we at Insider Monkey hone in on the bigwigs of this club, close to 450 funds. Most estimates calculate that this group has its hands on most of the smart money’s total asset base, and by tracking their best investments, we have brought to light a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as integral, optimistic insider trading sentiment is another way to parse down the world of equities. Just as you’d expect, there are lots of motivations for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Several academic studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).

With all of this in mind, it’s important to take a look at the latest action regarding AVX Corporation (NYSE:AVX).

How have hedgies been trading AVX Corporation (NYSE:AVX)?

Heading into Q2, a total of 13 of the hedge funds we track were long in this stock, a change of -24% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly.

AVX Corporation (NYSE:AVX)Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in AVX Corporation (NYSE:AVX), worth close to $138.7 million, accounting for 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Martin Whitman of Third Avenue Management, with a $48.8 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Joel Greenblatt’s Gotham Asset Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

Seeing as AVX Corporation (NYSE:AVX) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds who were dropping their positions entirely last quarter. Interestingly, Neil Chriss’s Hutchin Hill Capital sold off the biggest stake of the “upper crust” of funds we key on, worth close to $0.4 million in stock., and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund dumped about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds last quarter.

What have insiders been doing with AVX Corporation (NYSE:AVX)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past six months. Over the last half-year time frame, AVX Corporation (NYSE:AVX) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to AVX Corporation (NYSE:AVX). These stocks are Encore Wire Corporation (NASDAQ:WIRE), Molex Incorporated (NASDAQ:MOLX), Sanmina Corp (NASDAQ:SANM), Dolby Laboratories, Inc. (NYSE:DLB), and Acuity Brands, Inc. (NYSE:AYI). This group of stocks are the members of the diversified electronics industry and their market caps are similar to AVX’s market cap.