Cypress Semiconductor Corporation (CY): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

Cypress Semiconductor Corporation (NASDAQ:CY) investors should be aware of a decrease in hedge fund interest of late.

To most market participants, hedge funds are perceived as unimportant, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open at present, we choose to focus on the top tier of this club, around 450 funds. It is widely believed that this group controls most of all hedge funds’ total asset base, and by watching their top investments, we have revealed a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as beneficial, bullish insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are lots of motivations for an upper level exec to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this method if you understand where to look (learn more here).

With all of this in mind, let’s take a peek at the latest action encompassing Cypress Semiconductor Corporation (NASDAQ:CY).

How are hedge funds trading Cypress Semiconductor Corporation (NASDAQ:CY)?

In preparation for this quarter, a total of 13 of the hedge funds we track were long in this stock, a change of -28% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully.

According to our comprehensive database, Harvest Capital Strategies, managed by Joseph A. Jolson, holds the biggest position in Cypress Semiconductor Corporation (NASDAQ:CY). Harvest Capital Strategies has a $22.1 million position in the stock, comprising 1.6% of its 13F portfolio. Sitting at the No. 2 spot is Mario Gabelli of GAMCO Investors, with a $8.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Ken Grossman and Glen Schneider’s SG Capital Management, Van Schreiber’s Bennett Lawrence Management and Cliff Asness’s AQR Capital Management.

Since Cypress Semiconductor Corporation (NASDAQ:CY) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers who were dropping their entire stakes in Q1. Interestingly, Paul Reeder and Edward Shapiro’s PAR Capital Management cut the biggest position of the 450+ funds we monitor, comprising close to $21.4 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund said goodbye to about $6.4 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds in Q1.

What do corporate executives and insiders think about Cypress Semiconductor Corporation (NASDAQ:CY)?

Bullish insider trading is most useful when the company in question has seen transactions within the past half-year. Over the last half-year time period, Cypress Semiconductor Corporation (NASDAQ:CY) has experienced 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Cypress Semiconductor Corporation (NASDAQ:CY). These stocks are Mellanox Technologies, Ltd. (NASDAQ:MLNX), Intersil Corp (NASDAQ:ISIL), Cavium Inc (NASDAQ:CAVM), Vishay Intertechnology (NYSE:VSH), and Advanced Micro Devices, Inc. (NYSE:AMD). This group of stocks are the members of the semiconductor – broad line industry and their market caps resemble CY’s market cap.

With the returns exhibited by Insider Monkey’s research, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Cypress Semiconductor Corporation (NASDAQ:CY) shareholders fit into this picture quite nicely.

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