Is Finisar Corporation (NASDAQ:FNSR) the right pick for your portfolio? The best stock pickers are betting on the stock. The number of bullish hedge fund bets improved by 5 in recent months.
To most traders, hedge funds are viewed as slow, old investment tools of years past. While there are over 8000 funds trading at present, we look at the moguls of this group, around 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total asset base, and by keeping an eye on their best equity investments, we have discovered a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as beneficial, positive insider trading activity is a second way to parse down the financial markets. There are plenty of incentives for an insider to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if piggybackers know where to look (learn more here).
With these “truths” under our belt, let’s take a glance at the key action surrounding Finisar Corporation (NASDAQ:FNSR).
How are hedge funds trading Finisar Corporation (NASDAQ:FNSR)?
Heading into 2013, a total of 14 of the hedge funds we track were bullish in this stock, a change of 56% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially.
Of the funds we track, Ken Fisher’s Fisher Asset Management had the most valuable position in Finisar Corporation (NASDAQ:FNSR), worth close to $73 million, comprising 0.2% of its total 13F portfolio. On Fisher Asset Management’s heels is Kerr Neilson of Platinum Asset Management, with a $16 million position; 1.8% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Chuck Royce’s Royce & Associates, Mark Broach’s Manatuck Hill Partners and SAC Subsidiary’s Sigma Capital Management.
Consequently, key hedge funds were leading the bulls’ herd. Manatuck Hill Partners, managed by Mark Broach, assembled the most outsized position in Finisar Corporation (NASDAQ:FNSR). Manatuck Hill Partners had 12 million invested in the company at the end of the quarter. SAC Subsidiary’s Sigma Capital Management also made a $8 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Grossman and Glen Schneider’s SG Capital Management, Steven Cohen’s SAC Capital Advisors, and Anand Parekh’s Alyeska Investment Group.
What do corporate executives and insiders think about Finisar Corporation (NASDAQ:FNSR)?
Insider buying is best served when the company we’re looking at has seen transactions within the past six months. Over the latest six-month time period, Finisar Corporation (NASDAQ:FNSR) has seen zero unique insiders purchasing, and 3 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 Finisar Corporation (NASDAQ:FNSR). These stocks are Black Box Corporation (NASDAQ:BBOX), Palo Alto Networks Inc (NYSE:PANW), Super Micro Computer, Inc. (NASDAQ:SMCI), Aruba Networks, Inc. (NASDAQ:ARUN), and Riverbed Technology, Inc. (NASDAQ:RVBD). All of these stocks are in the networking & communication devices industry and their market caps are similar to FNSR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Black Box Corporation (NASDAQ:BBOX) | 4 | 0 | 0 |
| Palo Alto Networks Inc (NYSE:PANW) | 13 | 0 | 6 |
| Super Micro Computer, Inc. (NASDAQ:SMCI) | 6 | 0 | 3 |
| Aruba Networks, Inc. (NASDAQ:ARUN) | 15 | 0 | 7 |
| Riverbed Technology, Inc. (NASDAQ:RVBD) | 23 | 0 | 5 |
With the results exhibited by our tactics, retail investors should always pay attention to hedge fund and insider trading activity, and Finisar Corporation (NASDAQ:FNSR) is no exception.
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