In the eyes of most shareholders, hedge funds are assumed to be unimportant, old financial tools of yesteryear. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the aristocrats of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total capital, and by keeping an eye on their top investments, we have brought to light a number of investment strategies that have historically outstripped the S&P 500 index. 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 began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as key, optimistic insider trading activity is a second way to parse down the marketplace. There are a number of stimuli for a bullish insider 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 impressive potential of this method if investors know what to do (learn more here).
Now, it’s important to take a gander at the latest action regarding Sparton Corporation (NYSE:SPA).
How have hedgies been trading Sparton Corporation (NYSE:SPA)?
In preparation for this quarter, a total of 4 of the hedge funds we track were long in this stock, a change of -20% from one quarter earlier.
Judging by the fact that Sparton Corporation (NYSE:SPA) has witnessed a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of money managers that slashed their entire stakes in Q1. At the top of the heap, Thomas E. Lynch’s Mill Road Capital Management cut the largest position of all the hedgies we monitor, totaling about $0.7 million in stock. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds in Q1.
How have insiders been trading Sparton Corporation (NYSE:SPA)?
Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, Sparton Corporation (NYSE:SPA) has seen 4 unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Sparton Corporation (NYSE:SPA). These stocks are Neonode, Inc (NASDAQ:NEON), Bel Fuse, Inc. (NASDAQ:BELFB), Intevac, Inc. (NASDAQ:IVAC), Maxwell Technologies Inc. (NASDAQ:MXWL), and American Superconductor Corporation (NASDAQ:AMSC). This group of stocks are in the diversified electronics industry and their market caps are similar to SPA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Neonode, Inc (NASDAQ:NEON) | 0 | 1 | |
| Bel Fuse, Inc. (NASDAQ:BELFB) | 5 | 0 | 0 |
| Intevac, Inc. (NASDAQ:IVAC) | 7 | 2 | 0 |
| Maxwell Technologies Inc. (NASDAQ:MXWL) | 10 | 0 | 2 |
| American Superconductor Corporation (NASDAQ:AMSC) | 6 | 1 | 1 |
With the results exhibited by our studies, retail investors should always watch hedge fund and insider trading sentiment, and Sparton Corporation (NYSE:SPA) is an important part of this process.
