Is Safeguard Scientifics, Inc (SFE) Going to Burn These Hedge Funds?

Safeguard Scientifics, Inc (NYSE:SFE) was in 6 hedge funds’ portfolio at the end of the fourth quarter of 2012. SFE has experienced an increase in hedge fund interest in recent months. There were 5 hedge funds in our database with SFE holdings at the end of the previous quarter.

In the financial world, there are tons of metrics shareholders can use to monitor publicly traded companies. A couple of the best are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a very impressive amount (see just how much).

Just as integral, optimistic insider trading sentiment is another way to break down the world of equities. Obviously, there are many incentives for an executive to sell shares of his or her company, but just one, very clear reason why they would buy. Various academic studies have demonstrated the useful potential of this method if “monkeys” understand what to do (learn more here).

Keeping this in mind, it’s important to take a glance at the recent action surrounding Safeguard Scientifics, Inc (NYSE:SFE).

How have hedgies been trading Safeguard Scientifics, Inc (NYSE:SFE)?

Heading into 2013, a total of 6 of the hedge funds we track were bullish in this stock, a change of 20% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly.

Of the funds we track, GRT Capital Partners, managed by Gregory Fraser, Rudolph Kluiber, and Timothy Kroch, holds the largest position in Safeguard Scientifics, Inc (NYSE:SFE). GRT Capital Partners has a $1.9 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Michael Price of MFP Investors, with a $1.6 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Andy Redleaf’s Whitebox Advisors, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.

Now, key money managers have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the most outsized position in Safeguard Scientifics, Inc (NYSE:SFE). Two Sigma Advisors had 0.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.1 million investment in the stock during the quarter.

Insider trading activity in Safeguard Scientifics, Inc (NYSE:SFE)

Insider purchases made by high-level executives is at its handiest when the company in focus has seen transactions within the past 180 days. Over the latest half-year time period, Safeguard Scientifics, Inc (NYSE:SFE) has seen 2 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Safeguard Scientifics, Inc (NYSE:SFE). These stocks are Carbonite Inc (NASDAQ:CARB), Consolidated Graphics, Inc. (NYSE:CGX), Furiex Pharmaceuticals Inc (NASDAQ:FURX), CBIZ, Inc. (NYSE:CBZ), and Net 1 UEPS Technologies Inc (NASDAQ:UEPS). All of these stocks are in the business services industry and their market caps are similar to SFE’s market cap.

With the returns shown by Insider Monkey’s strategies, everyday investors must always monitor hedge fund and insider trading sentiment, and Safeguard Scientifics, Inc (NYSE:SFE) applies perfectly to this mantra.

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