Synopsys, Inc. (SNPS): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Synopsys, Inc. (NASDAQ:SNPS) investors should be aware of an increase in support from the world’s most elite money managers recently.

To most market participants, hedge funds are assumed to be underperforming, old financial tools of the past. While there are more than 8000 funds in operation at the moment, we hone in on the masters of this club, around 450 funds. It is estimated that this group controls the majority of all hedge funds’ total capital, and by keeping an eye on their highest performing equity investments, we have deciphered a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as key, optimistic insider trading activity is another way to break down the stock market universe. Obviously, there are lots of reasons for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).

Now, let’s take a look at the key action surrounding Synopsys, Inc. (NASDAQ:SNPS).

What have hedge funds been doing with Synopsys, Inc. (NASDAQ:SNPS)?

Heading into Q2, a total of 20 of the hedge funds we track were long in this stock, a change of 11% 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, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the most valuable position in Synopsys, Inc. (NASDAQ:SNPS). Alkeon Capital Management has a $204.8 million position in the stock, comprising 4.4% of its 13F portfolio. Coming in second is Sandler Capital Management, managed by Andrew Sandler, which held a $56.2 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, Cliff Asness’s AQR Capital Management and Clint Carlson’s Carlson Capital.

Consequently, key money managers have jumped into Synopsys, Inc. (NASDAQ:SNPS) headfirst. Carlson Capital, managed by Clint Carlson, created the largest position in Synopsys, Inc. (NASDAQ:SNPS). Carlson Capital had 14.4 million invested in the company at the end of the quarter. Ken Fisher’s Fisher Asset Management also initiated a $9.5 million position during the quarter. The other funds with brand new SNPS positions are Anand Parekh’s Alyeska Investment Group, Mark A. Nordlicht’s Platinum Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Insider trading activity in Synopsys, Inc. (NASDAQ:SNPS)

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the latest 180-day time frame, Synopsys, Inc. (NASDAQ:SNPS) has experienced zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Synopsys, Inc. (NASDAQ:SNPS). These stocks are Siliconware Precision Industries (ADR) (NASDAQ:SPIL), Lam Research Corporation (NASDAQ:LRCX), United Microelectronics Corp (ADR) (NYSE:UMC), Cree, Inc. (NASDAQ:CREE), and Advanced Semiconductor Engineering (ADR) (NYSE:ASX). All of these stocks are in the semiconductor equipment & materials industry and their market caps match SNPS’s market cap.