Here is What Hedge Funds Think About Luminex Corporation (LMNX)

Luminex Corporation (NASDAQ:LMNX) has experienced a decrease in support from the world’s most elite money managers lately.

According to most shareholders, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the top tier of this club, about 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total asset base, and by monitoring their best picks, we have unsheathed a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as key, bullish insider trading activity is a second way to break down the world of equities. Just as you’d expect, there are many incentives for an executive to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this tactic if shareholders understand what to do (learn more here).

Consequently, let’s take a look at the recent action encompassing Luminex Corporation (NASDAQ:LMNX).

What does the smart money think about Luminex Corporation (NASDAQ:LMNX)?

Heading into 2013, a total of 8 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, holds the biggest position in Luminex Corporation (NASDAQ:LMNX). Sectoral Asset Management has a $10 million position in the stock, comprising 0.3% of its 13F portfolio. On Sectoral Asset Management’s heels is Citadel Investment Group, managed by Ken Griffin, which held a $4.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and Mike Vranos’s Ellington.

Due to the fact that Luminex Corporation (NASDAQ:LMNX) has witnessed a declination in interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers that elected to cut their full holdings at the end of the year. Interestingly, SAC Subsidiary’s CR Intrinsic Investors cut the biggest position of the 450+ funds we monitor, worth close to $2 million in stock., and Cliff Asness of AQR Capital Management was right behind this move, as the fund dropped about $0.3 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Luminex Corporation (NASDAQ:LMNX)?

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past half-year. Over the last six-month time period, Luminex Corporation (NASDAQ:LMNX) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Luminex Corporation (NASDAQ:LMNX). These stocks are Merit Medical Systems, Inc. (NASDAQ:MMSI), ICU Medical, Incorporated (NASDAQ:ICUI), Cantel Medical Corp. (NYSE:CMN), Tornier N.V. (NASDAQ:TRNX), and Conceptus, Inc. (NASDAQ:CPTS). This group of stocks belong to the medical instruments & supplies industry and their market caps are similar to LMNX’s market cap.

With the returns exhibited by the aforementioned studies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Luminex Corporation (NASDAQ:LMNX) applies perfectly to this mantra.

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