If you were to ask many of your peers, hedge funds are seen as bloated, outdated financial vehicles of a forgotten age. Although there are over 8,000 hedge funds trading today, Insider Monkey looks at the moguls of this group, around 525 funds. Analysts calculate that this group oversees the lion’s share of the hedge fund industry’s total assets, and by watching their highest quality picks, we’ve unsheathed a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 33 percentage points in 11 months (explore the details and some picks here).
Just as useful, optimistic insider trading sentiment is a second way to analyze the stock market universe. Obviously, there are many motivations for an insider to downsize shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the valuable potential of this tactic if you understand where to look (learn more here).
What’s more, let’s discuss the newest info for Brocade Communications Systems, Inc. (NASDAQ:BRCD).
What does the smart money think about Brocade Communications Systems, Inc. (NASDAQ:BRCD)?
At the end of the second quarter, a total of 29 of the hedge funds we track were long in this stock, a change of 16% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings substantially.
Consequently, particular hedge funds have jumped into Brocade Communications Systems, Inc. (NASDAQ:BRCD) headfirst. Blue Harbour Group, managed by Clifton S. Robbins, assembled the largest position in Brocade Communications Systems, Inc. (NASDAQ:BRCD). Blue Harbour Group had 127.3 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $80.7 million position during the quarter. The other funds with brand new BRCD positions are George Soros’s Soros Fund Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and David Dreman’s Dreman Value Management.
What have insiders been doing with Brocade Communications Systems, Inc. (NASDAQ:BRCD)?
Insider buying made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last six-month time frame, Brocade Communications Systems, Inc. (NASDAQ:BRCD) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to Brocade Communications Systems, Inc. (NASDAQ:BRCD). These stocks are Seagate Technology PLC (NASDAQ:STX), NetApp Inc. (NASDAQ:NTAP), Western Digital Corp. (NASDAQ:WDC), Emulex Corporation (NYSE:ELX), and Fusion-IO, Inc. (NYSE:FIO). All of these stocks are in the data storage devices industry and their market caps resemble BRCD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Seagate Technology PLC (NASDAQ:STX) | 24 | 0 | 0 |
| NetApp Inc. (NASDAQ:NTAP) | 50 | 0 | 0 |
| Western Digital Corp. (NASDAQ:WDC) | 37 | 0 | 0 |
| Emulex Corporation (NYSE:ELX) | 22 | 0 | 0 |
| Fusion-IO, Inc. (NYSE:FIO) | 21 | 0 | 0 |
Using the returns explained by our tactics, average investors must always pay attention to hedge fund and insider trading sentiment, and Brocade Communications Systems, Inc. (NASDAQ:BRCD) is an important part of this process.
