According to most investors, hedge funds are assumed to be slow, old financial tools of the past. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey look at the aristocrats of this group, around 450 funds. It is estimated that this group has its hands on most of the hedge fund industry’s total capital, and by keeping an eye on their top equity investments, we have discovered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced 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 topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as important, bullish insider trading activity is another way to break down the marketplace. As the old adage goes: there are plenty of incentives for an insider to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if piggybackers know what to do (learn more here).
Keeping this in mind, let’s take a gander at the key action surrounding Spansion Inc. (NYSE:CODE).
Hedge fund activity in Spansion Inc. (NYSE:CODE)
At the end of the fourth quarter, a total of 19 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially.
Of the funds we track, Chilton Investment Company, managed by Richard Chilton, holds the largest position in Spansion Inc. (NYSE:CODE). Chilton Investment Company has a $68 million position in the stock, comprising 1.9% of its 13F portfolio. On Chilton Investment Company’s heels is Charles de Vaulx of International Value Advisers, with a $28 million position; 0% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Steven Cohen’s SAC Capital Advisors, Michael Novogratz’s Fortress Investment Group and Christopher Pucillo’s Solus Alternative Asset Management.
Since Spansion Inc. (NYSE:CODE) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of funds that elected to cut their full holdings at the end of the year. Intriguingly, Meryl Witmer’s Eagle Value Partners cut the biggest stake of the “upper crust” of funds we watch, valued at an estimated $2 million in stock.. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $1 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Spansion Inc. (NYSE:CODE)?
Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time period, Spansion Inc. (NYSE:CODE) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the results exhibited by our time-tested strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Spansion Inc. (NYSE:CODE) is no exception.
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