Should You Buy Newport Corporation (NEWP)?

Newport Corporation (NASDAQ:NEWP) was in 13 hedge funds’ portfolio at the end of the first quarter of 2013. NEWP investors should pay attention to an increase in enthusiasm from smart money recently. There were 10 hedge funds in our database with NEWP positions at the end of the previous quarter.

In the eyes of most stock holders, hedge funds are viewed as underperforming, old investment vehicles of yesteryear. While there are over 8000 funds trading today, we at Insider Monkey look at the masters of this club, about 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total capital, and by tracking their highest performing picks, we have formulated a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as key, positive insider trading activity is another way to break down the investments you’re interested in. Obviously, there are a number of motivations for a bullish insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Several academic studies have demonstrated the impressive potential of this tactic if investors understand what to do (learn more here).

With all of this in mind, we’re going to take a peek at the key action surrounding Newport Corporation (NASDAQ:NEWP).

How have hedgies been trading Newport Corporation (NASDAQ:NEWP)?

Heading into Q2, a total of 13 of the hedge funds we track held long positions in this stock, a change of 30% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Newport Corporation (NASDAQ:NEWP), worth close to $50.6 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is GMT Capital, managed by Thomas E. Claugus, which held a $9.2 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Michael Kaufman’s MAK Capital One, Israel Englander’s Millennium Management and Joel Greenblatt’s Gotham Asset Management.

As aggregate interest increased, key money managers were breaking ground themselves. GMT Capital, managed by Thomas E. Claugus, created the largest position in Newport Corporation (NASDAQ:NEWP). GMT Capital had 9.2 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $1.7 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Steven Cohen’s SAC Capital Advisors, and Mike Vranos’s Ellington.

What have insiders been doing with Newport Corporation (NASDAQ:NEWP)?

Insider purchases made by high-level executives is best served when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time period, Newport Corporation (NASDAQ:NEWP) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Newport Corporation (NASDAQ:NEWP). These stocks are Edgen Group Inc (NYSE:EDG), Wesco Aircraft Holdings Inc (NYSE:WAIR), DXP Enterprises Inc (NASDAQ:DXPE), RTI International Metals, Inc. (NYSE:RTI), and Susser Petroleum Partners LP (NYSE:SUSP). All of these stocks are in the industrial equipment wholesale industry and their market caps resemble NEWP’s market cap.