Is Mentor Graphics Corp (NASDAQ:MENT) an exceptional stock to buy now? Investors who are in the know are getting less bullish. The number of long hedge fund bets retreated by 2 lately.
If you’d ask most market participants, hedge funds are assumed to be worthless, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open today, we choose to focus on the masters of this group, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the smart money’s total asset base, and by monitoring their highest performing investments, we have determined a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as key, positive insider trading sentiment is a second way to break down the investments you’re interested in. As the old adage goes: there are plenty of reasons for an insider to get rid of shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this method if “monkeys” understand what to do (learn more here).
Consequently, let’s take a glance at the recent action regarding Mentor Graphics Corp (NASDAQ:MENT).
What have hedge funds been doing with Mentor Graphics Corp (NASDAQ:MENT)?
Heading into 2013, a total of 16 of the hedge funds we track were long in this stock, a change of -11% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially.
According to our comprehensive database, Icahn Capital LP, managed by Carl Icahn, holds the biggest position in Mentor Graphics Corp (NASDAQ:MENT). Icahn Capital LP has a $274.4 million position in the stock, comprising 2.1% of its 13F portfolio. On Icahn Capital LP’s heels is Gregg J. Powers of Private Capital Management, with a $36.2 million position; 3.6% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Ken Fisher’s Fisher Asset Management, David Dreman’s Dreman Value Management and Andrew Sandler’s Sandler Capital Management.
Since Mentor Graphics Corp (NASDAQ:MENT) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds who were dropping their entire stakes at the end of the year. It’s worth mentioning that Israel Englander’s Millennium Management dumped the largest stake of the 450+ funds we track, totaling an estimated $4.4 million in stock., and Israel Englander of Catapult Capital Management was right behind this move, as the fund dropped about $2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds at the end of the year.
What do corporate executives and insiders think about Mentor Graphics Corp (NASDAQ:MENT)?
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the last six-month time frame, Mentor Graphics Corp (NASDAQ:MENT) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Mentor Graphics Corp (NASDAQ:MENT). These stocks are National Instruments Corp (NASDAQ:NATI), Concur Technologies, Inc. (NASDAQ:CNQR), PTC Inc (NASDAQ:PMTC), Tyler Technologies, Inc. (NYSE:TYL), and ACI Worldwide Inc (NASDAQ:ACIW). This group of stocks are in the technical & system software industry and their market caps match MENT’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| National Instruments Corp (NASDAQ:NATI) | 8 | 1 | 4 |
| Concur Technologies, Inc. (NASDAQ:CNQR) | 12 | 0 | 9 |
| PTC Inc (NASDAQ:PMTC) | 12 | 0 | 8 |
| Tyler Technologies, Inc. (NYSE:TYL) | 9 | 1 | 8 |
| ACI Worldwide Inc (NASDAQ:ACIW) | 11 | 0 | 2 |
With the results exhibited by the aforementioned strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Mentor Graphics Corp (NASDAQ:MENT) is no exception.
