To most traders, hedge funds are perceived as unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, we choose to focus on the upper echelon of this group, close to 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by keeping an eye on their best picks, we have come up with a few investment strategies that have historically beaten Mr. Market. 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 outclassed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as key, bullish insider trading sentiment is another way to parse down the investments you’re interested in. There are plenty of stimuli for an executive 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 “monkeys” know what to do (learn more here).
Consequently, it’s important to take a glance at the key action regarding Silicon Graphics International Corp (NASDAQ:SGI).
What have hedge funds been doing with Silicon Graphics International Corp (NASDAQ:SGI)?
At the end of the fourth quarter, a total of 7 of the hedge funds we track held long positions in this stock, a change of -13% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, Prescott Group Capital Management, managed by Phil Frohlich, holds the most valuable position in Silicon Graphics International Corp (NASDAQ:SGI). Prescott Group Capital Management has a $21 million position in the stock, comprising 5.5% of its 13F portfolio. On Prescott Group Capital Management’s heels is Joseph A. Jolson of Harvest Capital Strategies, with a $2.6 million position; 0.5% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.
Judging by the fact that Silicon Graphics International Corp (NASDAQ:SGI) has faced falling interest from the smart money, we can see that there was a specific group of fund managers who sold off their entire stakes in Q4. Intriguingly, John Burbank’s Passport Capital sold off the biggest position of the 450+ funds we key on, totaling close to $0.2 million in stock. These transactions are interesting, as total hedge fund interest dropped by 1 funds in Q4.
What do corporate executives and insiders think about Silicon Graphics International Corp (NASDAQ:SGI)?
Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time frame, Silicon Graphics International Corp (NASDAQ:SGI) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Silicon Graphics International Corp (NASDAQ:SGI). These stocks are International Business Machines Corp. (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), Teradata Corporation (NYSE:TDC), and Cray Inc. (NASDAQ:CRAY). This group of stocks are in the diversified computer systems industry and their market caps match SGI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| International Business Machines Corp. (NYSE:IBM) | 47 | 0 | 17 |
| Hewlett-Packard Company (NYSE:HPQ) | 47 | 0 | 0 |
| Teradata Corporation (NYSE:TDC) | 22 | 0 | 4 |
| Cray Inc. (NASDAQ:CRAY) | 17 | 0 | 7 |
With the returns exhibited by the aforementioned strategies, retail investors must always monitor hedge fund and insider trading activity, and Silicon Graphics International Corp (NASDAQ:SGI) is an important part of this process.
