Should You Buy Magnachip Semiconductor Corp (MX)?

Is Magnachip Semiconductor Corp (NYSE:MX) ready to rally soon? Investors who are in the know are becoming hopeful. The number of long hedge fund bets went up by 1 in recent months.

To the average investor, there are dozens of methods market participants can use to monitor Mr. Market. A couple of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best fund managers can outclass the broader indices by a superb margin (see just how much).

Just as integral, optimistic insider trading sentiment is a second way to break down the world of equities. Obviously, there are a number of motivations for an executive to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this strategy if shareholders understand where to look (learn more here).

With these “truths” under our belt, let’s take a look at the recent action encompassing Magnachip Semiconductor Corp (NYSE:MX).

Hedge fund activity in Magnachip Semiconductor Corp (NYSE:MX)

At the end of the first quarter, a total of 16 of the hedge funds we track were long in this stock, a change of 7% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially.

When looking at the hedgies we track, Avenue Capital, managed by Marc Lasry, holds the most valuable position in Magnachip Semiconductor Corp (NYSE:MX). Avenue Capital has a $129.5 million position in the stock, comprising 22.2% of its 13F portfolio. Coming in second is Harvest Capital Strategies, managed by Joseph A. Jolson, which held a $21.8 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Jim Simons’s Renaissance Technologies, Steven Cohen’s SAC Capital Advisors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

As one would reasonably expect, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Magnachip Semiconductor Corp (NYSE:MX). Citadel Investment Group had 4.6 million invested in the company at the end of the quarter. Scott Burney’s Bluefin Investment Management also made a $3.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Chuck Royce’s Royce & Associates and David Costen Haley’s HBK Investments.

How have insiders been trading Magnachip Semiconductor Corp (NYSE:MX)?

Insider buying is most useful when the company in question has experienced transactions within the past six months. Over the last 180-day time period, Magnachip Semiconductor Corp (NYSE:MX) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Magnachip Semiconductor Corp (NYSE:MX). These stocks are GT Advanced Technologies Inc (NASDAQ:GTAT), Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Lattice Semiconductor (NASDAQ:LSCC), and JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO). All of these stocks are in the semiconductor – specialized industry and their market caps resemble MX’s market cap.