Should You Avoid Daktronics, Inc. (DAKT)?

Is Daktronics, Inc. (NASDAQ:DAKT) a buy, sell, or hold? Prominent investors are taking a pessimistic view. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience

At the moment, there are plenty of gauges market participants can use to analyze Mr. Market. Two of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best investment managers can trounce the S&P 500 by a solid margin (see just how much).

Just as important, bullish insider trading sentiment is a second way to parse down the marketplace. Obviously, there are a variety of stimuli for an upper level exec to get rid of shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this tactic if you understand what to do (learn more here).

Now, it’s important to take a gander at the key action surrounding Daktronics, Inc. (NASDAQ:DAKT).

What does the smart money think about Daktronics, Inc. (NASDAQ:DAKT)?

At the end of the first quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings meaningfully.

According to our comprehensive database, Chuck Royce’s Royce & Associates had the biggest position in Daktronics, Inc. (NASDAQ:DAKT), worth close to $6 million, accounting for less than 0.1%% of its total 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, managed by Jim Simons, which held a $3.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Robert B. Gillam’s McKinley Capital Management, Mario Gabelli’s GAMCO Investors and Joel Greenblatt’s Gotham Asset Management.

Due to the fact that Daktronics, Inc. (NASDAQ:DAKT) has faced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their entire stakes heading into Q2. Intriguingly, Israel Englander’s Millennium Management sold off the biggest investment of the “upper crust” of funds we monitor, comprising an estimated $1.3 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Daktronics, Inc. (NASDAQ:DAKT)?

Insider buying is best served when the company in question has seen transactions within the past six months. Over the latest 180-day time frame, Daktronics, Inc. (NASDAQ:DAKT) has experienced zero unique insiders purchasing, and 2 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 Daktronics, Inc. (NASDAQ:DAKT). These stocks are Powell Industries, Inc. (NASDAQ:POWL), Electro Scientific Industries, Inc. (NASDAQ:ESIO), Ameresco Inc (NYSE:AMRC), Preformed Line Products Company (NASDAQ:PLPC), and Zoltek Companies, Inc. (NASDAQ:ZOLT). All of these stocks are in the industrial electrical equipment industry and their market caps resemble DAKT’s market cap.

With the returns exhibited by the aforementioned research, retail investors should always keep an eye on hedge fund and insider trading activity, and Daktronics, Inc. (NASDAQ:DAKT) is an important part of this process.

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