Cisco Systems, Inc. (NASDAQ:CSCO) was in 58 hedge funds’ portfolio at the end of the fourth quarter of 2012. CSCO shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 66 hedge funds in our database with CSCO positions at the end of the previous quarter.
According to most traders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey look at the crème de la crème of this group, about 450 funds. Most estimates calculate that this group oversees most of all hedge funds’ total asset base, and by keeping an eye on their top picks, we have unsheathed a number of investment strategies that have historically outperformed the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Just as important, bullish insider trading sentiment is another way to parse down the investments you’re interested in. As the old adage goes: there are lots of stimuli for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).
Now, let’s take a gander at the latest action surrounding Cisco Systems, Inc. (NASDAQ:CSCO).
Hedge fund activity in Cisco Systems, Inc. (NASDAQ:CSCO)
At the end of the fourth quarter, a total of 58 of the hedge funds we track were long in this stock, a change of -12% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably.
Of the funds we track, Donald Yacktman’s Yacktman Asset Management had the largest position in Cisco Systems, Inc. (NASDAQ:CSCO), worth close to $1.031 billion, accounting for 6.2% of its total 13F portfolio. Sitting at the No. 2 spot is First Eagle Investment Management, managed by Jean-Marie Eveillard, which held a $907 million position; 4.4% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Ken Fisher’s Fisher Asset Management, Kerr Neilson’s Platinum Asset Management and Sandy Nairn’s Edinburgh Partners.
Seeing as Cisco Systems, Inc. (NASDAQ:CSCO) has witnessed falling interest from the smart money, we can see that there were a few fund managers who sold off their entire stakes last quarter. At the top of the heap, Kenneth Mario Garschina’s Mason Capital Management sold off the largest investment of the “upper crust” of funds we track, comprising about $248 million in stock., and Robert Rodriguez and Steven Romick of First Pacific Advisors LLC was right behind this move, as the fund cut about $215 million worth. These moves are important to note, as total hedge fund interest fell by 8 funds last quarter.
How have insiders been trading Cisco Systems, Inc. (NASDAQ:CSCO)?
Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past six months. Over the last half-year time period, Cisco Systems, Inc. (NASDAQ:CSCO) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).
With the returns shown by the aforementioned tactics, retail investors must always pay attention to hedge fund and insider trading sentiment, and Cisco Systems, Inc. (NASDAQ:CSCO) applies perfectly to this mantra.
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