This Metric Says You Are Smart to Buy Electro Scientific Industries, Inc. (ESIO)

Is it smart to be bullish on Electro Scientific Industries, Inc. (NASDAQ:ESIO)?

In the financial world, there are many metrics investors can use to watch their holdings. Two of the most useful are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the market by a superb margin (see just how much).

Just as necessary, positive insider trading activity is another way to look at the marketplace. There are a number of incentives for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this tactic if piggybackers know where to look (learn more here).

Keeping this in mind, we’re going to analyze the newest info for Electro Scientific Industries, Inc. (NASDAQ:ESIO).

How are hedge funds trading Electro Scientific Industries, Inc. (NASDAQ:ESIO)?

In preparation for the third quarter, a total of 9 of the hedge funds we track were long in this stock, a change of 50% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully.

According to our 13F database, David Nierenberg’s Nierenberg Investment Management had the biggest position in Electro Scientific Industries, Inc. (NASDAQ:ESIO), worth close to $34.2 million, comprising 25.1% of its total 13F portfolio. Coming in second is Martin Whitman of Third Avenue Management, with a $17.3 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital.

As aggregate interest spiked, particular hedge funds have jumped into Electro Scientific Industries, Inc. (NASDAQ:ESIO) headfirst. Nierenberg Investment Management, managed by David Nierenberg, established the most outsized position in Electro Scientific Industries, Inc. (NASDAQ:ESIO). Nierenberg Investment Management had 34.2 million invested in the company at the end of the quarter. Martin Whitman’s Third Avenue Management also made a $17.3 million investment in the stock during the quarter. The other funds with brand new ESIO positions are Jim Simons’s Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

How have insiders been trading Electro Scientific Industries, Inc. (NASDAQ:ESIO)?

Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last six-month time period, Electro Scientific Industries, Inc. (NASDAQ:ESIO) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Electro Scientific Industries, Inc. (NASDAQ:ESIO). These stocks are Zoltek Companies, Inc. (NASDAQ:ZOLT), Coleman Cable, Inc. (NASDAQ:CCIX), Capstone Turbine Corporation (NASDAQ:CPST), Preformed Line Products Company (NASDAQ:PLPC), and Ameresco Inc (NYSE:AMRC). This group of stocks are the members of the industrial electrical equipment industry and their market caps are similar to ESIO’s market cap.