Is Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD) a good investment?
If you were to ask many traders, hedge funds are seen as overrated, outdated financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds with their doors open in present day, this site focuses on the upper echelon of this club, close to 525 funds. Analysts calculate that this group has its hands on most of the smart money’s total assets, and by monitoring their best equity investments, we’ve determined 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 a 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 outperformed the S&P 500 index by 33 percentage points in 11 months (find the details here).
Equally as key, bullish insider trading activity is another way to analyze the investments you’re interested in. Just as you’d expect, there are lots of incentives for a corporate insider to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).
Thus, let’s discuss the newest info about Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD).
How have hedgies been trading Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD)?
In preparation for the third quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -20% from one quarter earlier. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes significantly.
When using filings from the hedgies we track, George Soros’s Soros Fund Management had the biggest position in Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD), worth close to $49.9 million, comprising 0.5% of its total 13F portfolio. On Soros Fund Management’s heels is PEAK6 Capital Management, managed by Matthew Hulsizer, which held a $22.9 million call position; 0.1% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Eric Mindich’s Eton Park Capital, Matthew Halbower’s Pentwater Capital Management and Christopher Zepf and Brian Thonn’s Kingdom Ridge Capital.
As Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD) has experienced dropping sentiment from upper-tier hedge fund managers, it’s safe to say that there exists a select few money managers that slashed their full holdings heading into Q2. At the top of the heap, Josh Resnick’s Jericho Capital Asset Management dumped the largest position of the “upper crust” of funds we track, comprising close to $11.9 million in stock. Charles Clough’s fund, Clough Capital Partners, also sold off its stock, about $6.6 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds heading into Q2.
What have insiders been doing with Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD)?
Bullish insider trading is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the last half-year time period, Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD). These stocks are Advanced Micro Devices, Inc. (NYSE:AMD), Cypress Semiconductor Corporation (NASDAQ:CY), M/A-COM Technology Solutions Holdings (NASDAQ:MTSI), Intersil Corp (NASDAQ:ISIL), and Integrated Device Technology, Inc. (NASDAQ:IDTI). This group of stocks are in the semiconductor – broad line industry and their market caps match SPRD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Advanced Micro Devices, Inc. (NYSE:AMD) | 17 | 0 | 0 |
| Cypress Semiconductor Corporation (NASDAQ:CY) | 13 | 0 | 0 |
| M/A-COM Technology Solutions Holdings (NASDAQ:MTSI) | 4 | 0 | 0 |
| Intersil Corp (NASDAQ:ISIL) | 7 | 0 | 0 |
| Integrated Device Technology, Inc. (NASDAQ:IDTI) | 19 | 0 | 0 |
Using the results demonstrated by the previously mentioned studies, average investors should always pay attention to hedge fund and insider trading activity, and Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD) applies perfectly to this mantra.
