Spansion Inc. (CODE): Are Hedge Funds Right About This Stock?

Spansion Inc. (NYSE:CODE) was in 23 hedge funds’ portfolio at the end of March. CODE has seen an increase in hedge fund interest recently. There were 20 hedge funds in our database with CODE positions at the end of the previous quarter.

In today’s marketplace, there are tons of methods investors can use to monitor Mr. Market. Some of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite money managers can trounce the S&P 500 by a healthy amount (see just how much).

Equally as important, positive insider trading activity is another way to parse down the investments you’re interested in. Just as you’d expect, there are many reasons for an executive to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this tactic if you know where to look (learn more here).

With these “truths” under our belt, it’s important to take a peek at the latest action surrounding Spansion Inc. (NYSE:CODE).

How have hedgies been trading Spansion Inc. (NYSE:CODE)?

Heading into Q2, a total of 23 of the hedge funds we track held long positions in this stock, a change of 15% from the first quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Chilton Investment Company, managed by Richard Chilton, holds the biggest position in Spansion Inc. (NYSE:CODE). Chilton Investment Company has a $48.6 million position in the stock, comprising 1.3% of its 13F portfolio. The second largest stake is held by International Value Advisers, managed by Charles de Vaulx, which held a $26.7 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other peers that hold long positions include Peter S. Park’s Park West Asset Management, Steven Cohen’s SAC Capital Advisors and Christopher Pucillo’s Solus Alternative Asset Management.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Royce & Associates, managed by Chuck Royce, created the most outsized position in Spansion Inc. (NYSE:CODE). Royce & Associates had 5.2 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also made a $4.1 million investment in the stock during the quarter. The other funds with brand new CODE positions are Louis Bacon’s Moore Global Investments, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Jon Bauer’s Contrarian Capital.

Insider trading activity in Spansion Inc. (NYSE:CODE)

Insider trading activity, especially when it’s bullish, is most useful when the company in question has seen transactions within the past six months. Over the last half-year time period, Spansion Inc. (NYSE:CODE) has experienced zero unique insiders purchasing, and 4 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 Spansion Inc. (NYSE:CODE). These stocks are Netlist, Inc. (NASDAQ:NLST), SemiLEDs Corporation (NASDAQ:LEDS), Micron Technology, Inc. (NASDAQ:MU), Integrated Silicon Solution, Inc. (NASDAQ:ISSI), and Rambus Inc. (NASDAQ:RMBS). All of these stocks are in the semiconductor- memory chips industry and their market caps are similar to CODE’s market cap.

With the results demonstrated by our studies, retail investors should always monitor hedge fund and insider trading sentiment, and Spansion Inc. (NYSE:CODE) applies perfectly to this mantra.

Click here to learn why you should track hedge funds