This Metric Says You Are Smart to Sell Linear Technology Corporation (NASDAQ:LLTC)

Linear Technology Corporation (NASDAQ:LLTC) shareholders have witnessed a decrease in support from the world’s most elite money managers recently.

To most traders, hedge funds are perceived as underperforming, old investment vehicles of years past. While there are more than 8000 funds trading at present, we hone in on the masters of this group, close to 450 funds. It is widely believed that this group oversees the lion’s share of all hedge funds’ total capital, and by watching their best investments, we have found a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Just as key, positive insider trading activity is a second way to parse down the stock market universe. Just as you’d expect, there are lots of incentives for an executive to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this strategy if piggybackers understand what to do (learn more here).

Now, let’s take a glance at the key action surrounding Linear Technology Corporation (NASDAQ:LLTC).

Hedge fund activity in Linear Technology Corporation (NASDAQ:LLTC)

At year’s end, a total of 21 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably.

Of the funds we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the biggest position in Linear Technology Corporation (NASDAQ:LLTC). First Eagle Investment Management has a $496 million position in the stock, comprising 1.8% of its 13F portfolio. On First Eagle Investment Management’s heels is Renaissance Technologies, managed by Jim Simons, which held a $282 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Ric Dillon’s Diamond Hill Capital, Christopher Lord’s Criterion Capital and Panayotis æTakisÆ Sparaggis’s Alkeon Capital Management.

Due to the fact that Linear Technology Corporation (NASDAQ:LLTC) has experienced a declination in interest from the smart money, it’s easy to see that there exists a select few money managers that slashed their positions entirely last quarter. It’s worth mentioning that D. E. Shaw’s D E Shaw cut the largest investment of the 450+ funds we monitor, valued at close to $3 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Linear Technology Corporation (NASDAQ:LLTC)

Insider buying is most useful when the company in focus has seen transactions within the past six months. Over the latest 180-day time frame, Linear Technology Corporation (NASDAQ:LLTC) has experienced zero unique insiders buying, and 13 insider sales (see the details of insider trades here).

With the returns shown by the aforementioned studies, retail investors should always monitor hedge fund and insider trading sentiment, and Linear Technology Corporation (NASDAQ:LLTC) applies perfectly to this mantra.

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