Is it smart to be bullish on Xyratex Ltd. (NASDAQ:XRTX)?
At the moment, there are plenty of indicators investors can use to monitor the equity markets. Two of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can beat the market by a superb amount (see just how much).
Equally as necessary, optimistic insider trading activity is a second way to analyze the stock market universe. There are plenty of incentives for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).
Thus, let’s analyze the newest info surrounding Xyratex Ltd. (NASDAQ:XRTX).
What have hedge funds been doing with Xyratex Ltd. (NASDAQ:XRTX)?
In preparation for the third quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 11% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly.
When using filings from the hedgies we track, Brett Hendrickson’s Nokomis Capital had the most valuable position in Xyratex Ltd. (NASDAQ:XRTX), worth close to $16.3 million, accounting for 6.6% of its total 13F portfolio. On Nokomis Capital’s heels is Chuck Royce of Royce & Associates, with a $12.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Grossman and Glen Schneider’s SG Capital Management.
Now, particular hedge funds were leading the bulls’ herd. Nokomis Capital, managed by Brett Hendrickson, assembled the most valuable position in Xyratex Ltd. (NASDAQ:XRTX). Nokomis Capital had 16.3 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also initiated a $12.4 million position during the quarter. The other funds with brand new XRTX positions are Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Ken Grossman and Glen Schneider’s SG Capital Management.
How have insiders been trading Xyratex Ltd. (NASDAQ:XRTX)?
Insider buying made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past six months. Over the latest six-month time period, Xyratex Ltd. (NASDAQ:XRTX) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Xyratex Ltd. (NASDAQ:XRTX). These stocks are OCZ Technology Group Inc. (NASDAQ:OCZ), Imation Corp. (NYSE:IMN), STEC, Inc. (NASDAQ:STEC), Datalink Corporation (NASDAQ:DTLK), and Quantum Corp (NYSE:QTM). This group of stocks belong to the data storage devices industry and their market caps resemble XRTX’s market cap.