Do Hedge Funds and Insiders Love Synopsys, Inc. (SNPS)?

If you were to ask many of your fellow readers, hedge funds are perceived as bloated, old financial tools of a period lost to current times. Although there are In excess of 8,000 hedge funds in operation today, Insider Monkey aim at the crème de la crème of this group, about 525 funds. It is widely held that this group controls the majority of all hedge funds’ total assets, and by monitoring their highest quality equity investments, we’ve come up with a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as crucial, optimistic insider trading activity is another way to analyze the world of equities. Just as you’d expect, there are lots of incentives for a corporate insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this tactic if “monkeys” know where to look (learn more here).

Keeping this in mind, let’s analyze the newest info for Synopsys, Inc. (NASDAQ:SNPS).

Hedge fund activity in Synopsys, Inc. (NASDAQ:SNPS)

In preparation for the third quarter, a total of 23 of the hedge funds we track held long positions in this stock, a change of 15% from the first quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly.

Out of the hedge funds we follow, Alkeon Capital Management, managed by Panayotis Sparaggis, holds the biggest position in Synopsys, Inc. (NASDAQ:SNPS). Alkeon Capital Management has a $203.6 million position in the stock, comprising 4.6% of its 13F portfolio. Coming in second is Andrew Sandler of Sandler Capital Management, with a $51.3 million position; 1.9% of its 13F portfolio is allocated to the company. Other peers that are bullish include Jim Simons’s Renaissance Technologies, Clint Carlson’s Carlson Capital and Cliff Asness’s AQR Capital Management.

As aggregate interest spiked, certain bigger names were breaking ground themselves. Alkeon Capital Management, managed by Panayotis Sparaggis, assembled the most valuable position in Synopsys, Inc. (NASDAQ:SNPS). Alkeon Capital Management had 203.6 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also made a $51.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Clint Carlson’s Carlson Capital, and Cliff Asness’s AQR Capital Management.

How have insiders been trading Synopsys, Inc. (NASDAQ:SNPS)?

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last half-year time frame, Synopsys, Inc. (NASDAQ:SNPS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Synopsys, Inc. (NASDAQ:SNPS). These stocks are Siliconware Precision Industries (ADR) (NASDAQ:SPIL), Lam Research Corporation (NASDAQ:LRCX), United Microelectronics Corp (ADR) (NYSE:UMC), Cree, Inc. (NASDAQ:CREE), and Advanced Semiconductor Engineering (ADR) (NYSE:ASX). All of these stocks are in the semiconductor equipment & materials industry and their market caps resemble SNPS’s market cap.

Using the results shown by our analyses, average investors must always track hedge fund and insider trading activity, and Synopsys, Inc. (NASDAQ:SNPS) shareholders fit into this picture quite nicely.

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