LSI Corp (LSI): Insiders Aren’t Crazy About It

LSI Corp (NASDAQ:LSI) was in 22 hedge funds’ portfolio at the end of March. LSI has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 28 hedge funds in our database with LSI holdings at the end of the previous quarter.

If you’d ask most investors, hedge funds are perceived as worthless, outdated financial tools of years past. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the crème de la crème of this club, around 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total asset base, and by watching their best stock picks, we have unsheathed 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 began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, optimistic insider trading sentiment is another way to parse down the financial markets. There are plenty of motivations for an executive to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this tactic if investors understand what to do (learn more here).

Keeping this in mind, it’s important to take a gander at the latest action surrounding LSI Corp (NASDAQ:LSI).

Hedge fund activity in LSI Corp (NASDAQ:LSI)

At the end of the first quarter, a total of 22 of the hedge funds we track held long positions in this stock, a change of -21% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the largest position in LSI Corp (NASDAQ:LSI), worth close to $196.7 million, accounting for 0.3% of its total 13F portfolio. On Citadel Investment Group’s heels is David Cohen and Harold Levy of Iridian Asset Management, with a $177.8 million position; 2.6% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.

Seeing as LSI Corp (NASDAQ:LSI) has faced bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few funds that slashed their positions entirely last quarter. Intriguingly, SAC Subsidiary’s Sigma Capital Management sold off the biggest position of the 450+ funds we track, totaling close to $7.7 million in stock.. Neil Chriss’s fund, Hutchin Hill Capital, also said goodbye to its stock, about $3.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.

How have insiders been trading LSI Corp (NASDAQ:LSI)?

Insider buying is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time frame, LSI Corp (NASDAQ:LSI) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to LSI Corp (NASDAQ:LSI). These stocks are Silicon Laboratories (NASDAQ:SLAB), NVIDIA Corporation (NASDAQ:NVDA), SunPower Corporation (NASDAQ:SPWR), Microchip Technology Inc. (NASDAQ:MCHP), and First Solar, Inc. (NASDAQ:FSLR). This group of stocks belong to the semiconductor – specialized industry and their market caps match LSI’s market cap.

With the returns demonstrated by the aforementioned research, everyday investors must always pay attention to hedge fund and insider trading sentiment, and LSI Corp (NASDAQ:LSI) is an important part of this process.

Click here to learn why you should track hedge funds