Avoid ScanSource, Inc. (SCSC)?

ScanSource, Inc. (NASDAQ:SCSC) has seen a decrease in hedge fund sentiment of late.

In the financial world, there are many indicators shareholders can use to watch their holdings. Some of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best money managers can outpace their index-focused peers by a healthy amount (see just how much).

Equally as important, bullish insider trading activity is a second way to break down the stock market universe. Obviously, there are a variety of incentives for an executive to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. 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, we’re going to take a look at the latest action surrounding ScanSource, Inc. (NASDAQ:SCSC).

How are hedge funds trading ScanSource, Inc. (NASDAQ:SCSC)?

Heading into Q2, a total of 8 of the hedge funds we track were bullish in this stock, a change of -20% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully.

According to our comprehensive database, First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, holds the largest position in ScanSource, Inc. (NASDAQ:SCSC). First Pacific Advisors LLC has a $43.3 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Gotham Asset Management, managed by Joel Greenblatt, which held a $2.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Paul Tudor Jones’s Tudor Investment Corp.

Due to the fact that ScanSource, Inc. (NASDAQ:SCSC) has faced falling interest from hedge fund managers, it’s easy to see that there were a few funds that slashed their full holdings heading into Q2. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest position of the “upper crust” of funds we key on, totaling close to $45.3 million in stock.. Jim Simons’s fund, Renaissance Technologies, also cut its stock, about $1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds heading into Q2.

How are insiders trading ScanSource, Inc. (NASDAQ:SCSC)?

Insider buying is most useful when the company in focus has experienced transactions within the past six months. Over the last half-year time frame, ScanSource, Inc. (NASDAQ:SCSC) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned strategies, everyday investors should always monitor hedge fund and insider trading sentiment, and ScanSource, Inc. (NASDAQ:SCSC) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds