Is Vitesse Semiconductor (NASDAQ:VTSS) a good investment?
If you were to ask many investors, hedge funds are viewed as overrated, old financial tools of a forgotten age. Although there are In excess of 8,000 hedge funds in operation today, Insider Monkey focuses on the crème de la crème of this club, around 525 funds. It is assumed that this group has its hands on the lion’s share of the smart money’s total capital, and by keeping an eye on their best stock picks, we’ve found a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per 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 topped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as useful, positive insider trading activity is another way to look at the world of equities. Obviously, there are a number of reasons for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this tactic if piggybackers know where to look (learn more here).
Thus, we’re going to analyze the recent info about Vitesse Semiconductor (NASDAQ:VTSS).
What have hedge funds been doing with Vitesse Semiconductor (NASDAQ:VTSS)?
In preparation for the third quarter, a total of 9 of the hedge funds we track were long in this stock, a change of 29% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes considerably.
According to our 13F database, Phil Frohlich’s Prescott Group Capital Management had the biggest position in Vitesse Semiconductor (NASDAQ:VTSS), worth close to $7 million, comprising 1.7% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which held a $4.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Chuck Royce’s Royce & Associates, Mark N. Diker’s Diker Management and J. Carlo Cannell’s Cannell Capital.
As one would understandably expect, certain bigger names were breaking ground themselves. Whitebox Advisors, managed by Andy Redleaf, established the largest position in Vitesse Semiconductor (NASDAQ:VTSS). Whitebox Advisors had 14.5 million invested in the company at the end of the quarter. Phil Frohlich’s Prescott Group Capital Management also initiated a $7 million position during the quarter. The other funds with new positions in the stock are Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management, and Chuck Royce’s Royce & Associates.
How have insiders been trading Vitesse Semiconductor (NASDAQ:VTSS)?
Insider buying is best served when the company in question has experienced transactions within the past 180 days. Over the latest half-year time frame, Vitesse Semiconductor (NASDAQ:VTSS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Vitesse Semiconductor (NASDAQ:VTSS). These stocks are QuickLogic Corporation (NASDAQ:QUIK), China Sunergy Co Ltd (NASDAQ:CSUN), O2Micro International Limited (ADR) (NASDAQ:OIIM), AXT Inc (NASDAQ:AXTI), and Sequans Communications SA ADR (NYSE:SQNS). All of these stocks are in the semiconductor – integrated circuits industry and their market caps resemble VTSS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| QuickLogic Corporation (NASDAQ:QUIK) | 3 | 0 | 0 |
| China Sunergy Co Ltd (NASDAQ:CSUN) | 0 | 0 | |
| O2Micro International Limited (ADR) (NASDAQ:OIIM) | 4 | 0 | 0 |
| AXT Inc (NASDAQ:AXTI) | 6 | 0 | 0 |
| Sequans Communications SA ADR (NYSE:SQNS) | 3 | 0 | 0 |
Using the returns shown by our tactics, average investors must always pay attention to hedge fund and insider trading activity, and Vitesse Semiconductor (NASDAQ:VTSS) applies perfectly to this mantra.
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Vitesse Semiconductor (VTSS): Insiders Are Buying, Should You?
