PMC-Sierra Inc (PMCS): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?

To the average investor, there are dozens of methods market participants can use to monitor publicly traded companies. A couple of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can beat their index-focused peers by a very impressive margin (see just how much).

Equally as necessary, optimistic insider trading activity is a second way to analyze the investments you’re interested in. Obviously, there are a variety of incentives for a bullish insider to drop shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this method if piggybackers understand where to look (learn more here).

Thus, let’s discuss the recent info about PMC-Sierra Inc (NASDAQ:PMCS).

Hedge fund activity in PMC-Sierra Inc (NASDAQ:PMCS)

Heading into Q3, a total of 16 of the hedge funds we track were long in this stock, a change of -16% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.

According to our 13F database, Eric Bannasch’s Cadian Capital had the biggest position in PMC-Sierra Inc (NASDAQ:PMCS), worth close to $171.4 million, comprising 5.3% of its total 13F portfolio. Coming in second is Ralph V. Whitworth of Relational Investors, with a $113.3 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Ken Fisher’s Fisher Asset Management, Ryan Frick and Oliver Evans’s Dorsal Capital Management and D. E. Shaw’s D E Shaw.

As PMC-Sierra Inc (NASDAQ:PMCS) has witnessed declining interest from upper-tier hedge fund managers, it’s easy to see that there exists a select few money managers that elected to cut their entire stakes heading into Q2. At the top of the heap, Ray Dalio’s Bridgewater Associates cut the largest position of the 450+ funds we track, valued at about $2 million in stock. Steven Cohen’s fund, SAC Capital Advisors, also dropped its stock, about $0.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds heading into Q2.

How are insiders trading PMC-Sierra Inc (NASDAQ:PMCS)?

Insider buying made by high-level executives is best served when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time period, PMC-Sierra Inc (NASDAQ:PMCS) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to PMC-Sierra Inc (NASDAQ:PMCS). These stocks are QLogic Corporation (NASDAQ:QLGC), Fairchild Semiconductor Intl Inc (NYSE:FCS), Power Integrations Inc (NASDAQ:POWI), RF Micro Devices, Inc. (NASDAQ:RFMD), and International Rectifier Corporation (NYSE:IRF). All of these stocks are in the semiconductor – integrated circuits industry and their market caps are closest to PMCS’s market cap.