Pulse Electronics Corp (PULS): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?

In today’s marketplace, there are plenty of methods investors can use to watch stocks. A couple of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top money managers can trounce the market by a very impressive margin (see just how much).

Equally as useful, optimistic insider trading sentiment is a second way to look at the financial markets. There are a variety of motivations for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Various academic studies have demonstrated the valuable potential of this strategy if “monkeys” understand what to do (learn more here).

Now that that’s out of the way, it’s important to discuss the recent info surrounding Pulse Electronics Corp (NYSE:PULS).

What does the smart money think about Pulse Electronics Corp (NYSE:PULS)?

In preparation for the third quarter, a total of 5 of the hedge funds we track were bullish in this stock, a change of -29% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.

Out of the hedge funds we follow, Oaktree Capital Management, managed by Howard Marks, holds the biggest position in Pulse Electronics Corp (NYSE:PULS). Oaktree Capital Management has a $10.1 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $0.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Jim Simons’s Renaissance Technologies, David Cohen and Harold Levy’s Iridian Asset Management and Ken Griffin’s Citadel Investment Group.

Because Pulse Electronics Corp (NYSE:PULS) has experienced a fall in interest from the smart money’s best and brightest, it’s easy to see that there were a few hedgies that decided to sell off their full holdings in Q1. Interestingly, Mario Gabelli’s GAMCO Investors cut the biggest stake of all the hedgies we watch, comprising close to $0 million in stock. D. E. Shaw’s fund, D E Shaw, also cut its stock, about $0 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds in Q1.

How are insiders trading Pulse Electronics Corp (NYSE:PULS)?

Insider buying made by high-level executives is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest six-month time frame, Pulse Electronics Corp (NYSE:PULS) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Pulse Electronics Corp (NYSE:PULS). These stocks are Wells-Gardner Electronics Corporation (NYSEAMEX:WGA), Microvision, Inc. (NASDAQ:MVIS), Planar Systems, Inc. (NASDAQ:PLNR), Revolution Lighting Technologies Inc (NASDAQ:RVLT), and LRAD Corp (NASDAQ:LRAD). This group of stocks are the members of the diversified electronics industry and their market caps match PULS’s market cap.

Using the results explained by our strategies, average investors must always track hedge fund and insider trading activity, and Pulse Electronics Corp (NYSE:PULS) shareholders fit into this picture quite nicely.

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