Hedge Funds Are Dumping Entropic Communications, Inc. (ENTR)

Entropic Communications, Inc. (NASDAQ:ENTR) was in 11 hedge funds’ portfolio at the end of March. ENTR investors should pay attention to a decrease in hedge fund sentiment recently. There were 12 hedge funds in our database with ENTR holdings at the end of the previous quarter.

To most market participants, hedge funds are seen as slow, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, we look at the upper echelon of this group, about 450 funds. Most estimates calculate that this group oversees most of all hedge funds’ total capital, and by watching their top investments, we have figured out a number of investment strategies that have historically outstripped the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as integral, bullish insider trading sentiment is another way to break down the stock market universe. There are a variety of motivations for an upper level exec to sell shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this strategy if piggybackers know what to do (learn more here).

Now, we’re going to take a glance at the key action surrounding Entropic Communications, Inc. (NASDAQ:ENTR).

What does the smart money think about Entropic Communications, Inc. (NASDAQ:ENTR)?

Heading into Q2, a total of 11 of the hedge funds we track held long positions in this stock, a change of -8% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly.

Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Entropic Communications, Inc. (NASDAQ:ENTR). Renaissance Technologies has a $1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Glenn Russell Dubin of Highbridge Capital Management, with a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

Judging by the fact that Entropic Communications, Inc. (NASDAQ:ENTR) has faced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds who were dropping their positions entirely heading into Q2. Interestingly, Mark N. Diker’s Diker Management said goodbye to the biggest position of the 450+ funds we key on, worth an estimated $4.8 million in stock., and Robert B. Gillam of McKinley Capital Management was right behind this move, as the fund dropped about $1.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds heading into Q2.

How have insiders been trading Entropic Communications, Inc. (NASDAQ:ENTR)?

Bullish insider trading is most useful when the company in focus has experienced transactions within the past six months. Over the last six-month time period, Entropic Communications, Inc. (NASDAQ:ENTR) has seen 6 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Entropic Communications, Inc. (NASDAQ:ENTR). These stocks are M/A-COM Technology Solutions Holdings (NASDAQ:MTSI), Kopin Corporation (NASDAQ:KOPN), FormFactor, Inc. (NASDAQ:FORM), Inphi Corporation (NYSE:IPHI), and Silicon Image, Inc. (NASDAQ:SIMG). This group of stocks are in the semiconductor – broad line industry and their market caps are similar to ENTR’s market cap.

With the returns shown by the aforementioned research, retail investors should always watch hedge fund and insider trading sentiment, and Entropic Communications, Inc. (NASDAQ:ENTR) is an important part of this process.

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