Should You Avoid Mercury Systems Inc (MRCY)?

Mercury Systems Inc (NASDAQ:MRCY) was in 8 hedge funds’ portfolio at the end of the first quarter of 2013. MRCY shareholders have witnessed a decrease in hedge fund interest lately. There were 8 hedge funds in our database with MRCY positions at the end of the previous quarter.

Mercury Systems Inc (NASDAQ:MRCY)In the 21st century investor’s toolkit, there are dozens of metrics investors can use to analyze Mr. Market. Some of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best fund managers can beat the market by a very impressive amount (see just how much).

Just as integral, bullish insider trading activity is another way to parse down the world of equities. Obviously, there are lots of stimuli for a bullish insider to cut shares of his or her company, but just one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the valuable potential of this tactic if “monkeys” know where to look (learn more here).

With all of this in mind, we’re going to take a look at the latest action regarding Mercury Systems Inc (NASDAQ:MRCY).

How are hedge funds trading Mercury Systems Inc (NASDAQ:MRCY)?

Heading into Q2, a total of 8 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially.

Of the funds we track, Chuck Royce’s Royce & Associates had the most valuable position in Mercury Systems Inc (NASDAQ:MRCY), worth close to $15.2 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Douglas T. Granat of Trigran Investments, with a $12.3 million position; 6.3% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include George Soros’s Soros Fund Management, Jim Simons’s Renaissance Technologies and Paul Tudor Jones’s Tudor Investment Corp.

Because Mercury Systems Inc (NASDAQ:MRCY) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few hedgies who were dropping their full holdings at the end of the first quarter. Intriguingly, Charles Davidson’s Wexford Capital said goodbye to the biggest position of the 450+ funds we watch, worth an estimated $0.2 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund dumped about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Mercury Systems Inc (NASDAQ:MRCY)?

Insider buying is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time period, Mercury Systems Inc (NASDAQ:MRCY) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

With the returns shown by Insider Monkey’s tactics, retail investors should always watch hedge fund and insider trading sentiment, and Mercury Systems Inc (NASDAQ:MRCY) is an important part of this process.

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