Tessera Technologies, Inc. (NASDAQ:TSRA): Hedge Funds and Insiders Are Bearish, What Should You Do? – Entegris Inc (NASDAQ:ENTG), Ultratech, Inc. (NASDAQ:UTEK)

Tessera Technologies, Inc. (NASDAQ:TSRA) was in 14 hedge funds’ portfolio at the end of December. TSRA has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 14 hedge funds in our database with TSRA positions at the end of the previous quarter.

Tessera Technologies, Inc. (NASDAQ:TSRA)

To most market participants, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are over 8000 funds trading at present, we choose to focus on the aristocrats of this club, around 450 funds. It is estimated that this group oversees the majority of the hedge fund industry’s total capital, and by paying attention to their top equity investments, we have unsheathed a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Just as important, bullish insider trading activity is a second way to parse down the financial markets. Just as you’d expect, there are many stimuli for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the impressive potential of this strategy if investors understand what to do (learn more here).

With these “truths” under our belt, let’s take a glance at the recent action regarding Tessera Technologies, Inc. (NASDAQ:TSRA).

What have hedge funds been doing with Tessera Technologies, Inc. (NASDAQ:TSRA)?

In preparation for this year, a total of 14 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly.

Of the funds we track, Jeffrey Smith’s Starboard Value LP had the biggest position in Tessera Technologies, Inc. (NASDAQ:TSRA), worth close to $53 million, accounting for 6% of its total 13F portfolio. Coming in second is SAC Capital Advisors, managed by Steven Cohen, which held a $28 million position; 6% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include Jim Simons’s Renaissance Technologies, Ryan Frick and Oliver Evans’s Dorsal Capital Management and D. E. Shaw’s D E Shaw.

Seeing as Tessera Technologies, Inc. (NASDAQ:TSRA) has experienced falling interest from the smart money, we can see that there is a sect of fund managers that slashed their entire stakes at the end of the year. It’s worth mentioning that Spencer M. Waxman’s Shannon River Fund Management sold off the largest position of the 450+ funds we watch, totaling about $4 million in stock.. Zeke Ashton’s fund, Centaur Capital Partners, also said goodbye to its call options., about $1 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading Tessera Technologies, Inc. (NASDAQ:TSRA)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time frame, Tessera Technologies, Inc. (NASDAQ:TSRA) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Tessera Technologies, Inc. (NASDAQ:TSRA). These stocks are Brooks Automation, Inc. (USA) (NASDAQ:BRKS), Entegris Inc (NASDAQ:ENTG), ATMI Inc (NASDAQ:ATMI), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), and Ultratech, Inc. (NASDAQ:UTEK). All of these stocks are in the semiconductor equipment & materials industry and their market caps are similar to TSRA’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Brooks Automation, Inc. (USA) (NASDAQ:BRKS) 10 0 2
Entegris Inc (NASDAQ:ENTG) 12 1 13
Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) 20 0 11
Ultratech, Inc. (NASDAQ:UTEK) 17 0 6

With the results demonstrated by our time-tested strategies, everyday investors must always monitor hedge fund and insider trading activity, and Tessera Technologies, Inc. (NASDAQ:TSRA) is no exception.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.