To most market participants, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at the moment, we hone in on the upper echelon of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by paying attention to their best investments, we have spotted a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as integral, positive insider trading sentiment is a second way to parse down the financial markets. There are plenty of motivations for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the impressive potential of this method if “monkeys” understand what to do (learn more here).
Now, let’s take a gander at the key action surrounding Cadence Design Systems Inc (NASDAQ:CDNS).
How have hedgies been trading Cadence Design Systems Inc (NASDAQ:CDNS)?
In preparation for this year, a total of 19 of the hedge funds we track were long in this stock, a change of -14% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly.
When looking at the hedgies we track, Donald Chiboucis’s Columbus Circle Investors had the biggest position in Cadence Design Systems Inc (NASDAQ:CDNS), worth close to $75 million, accounting for 0.6% of its total 13F portfolio. The second largest stake is held by Daruma Asset Management, managed by Mariko Gordon, which held a $60 million position; 0% of its 13F portfolio is allocated to the stock. Other hedgies with similar optimism include Panayotis æTakisÆ Sparaggis’s Alkeon Capital Management, Christopher Lord’s Criterion Capital and Jim Simons’s Renaissance Technologies.
Since Cadence Design Systems Inc (NASDAQ:CDNS) has experienced falling interest from the smart money, it’s easy to see that there exists a select few funds that elected to cut their full holdings at the end of the year. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp sold off the largest stake of all the hedgies we watch, valued at an estimated $0 million in stock.. D. E. Shaw’s fund, D E Shaw, also said goodbye to its stock, about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds at the end of the year.
How have insiders been trading Cadence Design Systems Inc (NASDAQ:CDNS)?
Insider buying is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time period, Cadence Design Systems Inc (NASDAQ:CDNS) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned studies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Cadence Design Systems Inc (NASDAQ:CDNS) is an important part of this process.
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