Is Cree, Inc. (NASDAQ:CREE) a buy?
Now, according to many of your peers, hedge funds are perceived as overrated, old investment tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open currently, Insider Monkey aim at the moguls of this group, about 525 funds. It is widely held that this group has its hands on most of the hedge fund industry’s total assets, and by paying attention to their best picks, we’ve unsheathed a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as necessary, bullish insider trading sentiment is a second way to analyze the investments you’re interested in. As the old adage goes: there are a number of reasons for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this tactic if investors know where to look (learn more here).
Furthermore, we’re going to analyze the latest info surrounding Cree, Inc. (NASDAQ:CREE).
How are hedge funds trading Cree, Inc. (NASDAQ:CREE)?
At the end of the second quarter, a total of 20 of the hedge funds we track were long in this stock, a change of -9% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully.
According to our 13F database, Donald Chiboucis’s Columbus Circle Investors had the most valuable position in Cree, Inc. (NASDAQ:CREE), worth close to $162.7 million, comprising 1.3% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $58.5 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other peers with similar optimism include John Murphy’s Alydar Capital, Paul Reeder and Edward Shapiro’s PAR Capital Management and Daniel Benton’s Andor Capital Management.
Judging by the fact that Cree, Inc. (NASDAQ:CREE) has witnessed declining interest from upper-tier hedge fund managers, logic holds that there was a specific group of funds that decided to sell off their positions entirely heading into Q2. It’s worth mentioning that Jim Simons’s Renaissance Technologies said goodbye to the largest investment of the 450+ funds we key on, comprising about $24.5 million in stock, and Chuck Royce of Royce & Associates was right behind this move, as the fund cut about $14.4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds heading into Q2.
What have insiders been doing with Cree, Inc. (NASDAQ:CREE)?
Insider buying is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest half-year time period, Cree, Inc. (NASDAQ:CREE) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Cree, Inc. (NASDAQ:CREE). These stocks are KLA-Tencor Corporation (NASDAQ:KLAC), United Microelectronics Corp (ADR) (NYSE:UMC), Synopsys, Inc. (NASDAQ:SNPS), Lam Research Corporation (NASDAQ:LRCX), and Advanced Semiconductor Engineering (ADR) (NYSE:ASX). This group of stocks are in the semiconductor equipment & materials industry and their market caps match CREE’s market cap.
