Do Hedge Funds Love Sierra Wireless, Inc. (USA) (SWIR)?

Is Sierra Wireless, Inc. (USA) (NASDAQ:SWIR) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Sierra Wireless, Inc. (USA) (NASDAQ:SWIR) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of September. At the end of this article we will also compare SWIR to other stocks including Cynosure, Inc. (NASDAQ:CYNO), Affymetrix, Inc. (NASDAQ:AFFX), and Yadkin Financial Corp (NASDAQ:YDKN) to get a better sense of its popularity.

In the 21st century investor’s toolkit there are numerous gauges market participants put to use to assess publicly traded companies. Some of the most useful gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best money managers can outperform their index-focused peers by a very impressive amount (see the details here).

Now, let’s check out the fresh action regarding Sierra Wireless, Inc. (USA) (NASDAQ:SWIR).

What have hedge funds been doing with Sierra Wireless, Inc. (USA) (NASDAQ:SWIR)?

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Sierra Wireless, Inc. (USA) (NASDAQ:SWIR). Royce & Associates has a $7.9 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second largest stake is held by Joseph A. Jolson’s Harvest Capital Strategies, with a $2.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Brian Ashford-Russell and Tim Woolley’s Polar Capital, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

Because Sierra Wireless, Inc. (USA) (NASDAQ:SWIR) has faced declining sentiment from the smart money, logic holds that there lies a certain “tier” of funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Clint Murray’s Lodge Hill Capital dropped the largest investment of all the hedgies followed by Insider Monkey, comprising about $3.9 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $1.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sierra Wireless, Inc. (USA) (NASDAQ:SWIR) but similarly valued. We will take a look at Cynosure, Inc. (NASDAQ:CYNO), Affymetrix, Inc. (NASDAQ:AFFX), Yadkin Financial Corp (NASDAQ:YDKN), and Supernus Pharmaceuticals Inc (NASDAQ:SUPN). All of these stocks’ market caps are closest to SWIR’s market cap.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $91 million, compared to $18 million in SWIR’s case. Affymetrix, Inc. (NASDAQ:AFFX) is the most popular stock in this table, while Yadkin Financial Corp (NASDAQ:YDKN) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks, Sierra Wireless, Inc. (USA) (NASDAQ:SWIR) is even less popular than YDKN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.