This Metric Says You Are Smart to Sell NeoPhotonics Corp (NPTN)

Is NeoPhotonics Corp (NYSE:NPTN) going to take off soon? The smart money is reducing their bets on the stock. The number of long hedge fund bets decreased by 1 in recent months.

At the moment, there are plenty of gauges investors can use to monitor their holdings. A pair of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite investment managers can outclass the S&P 500 by a superb margin (see just how much).

Just as integral, positive insider trading activity is a second way to parse down the marketplace. Obviously, there are plenty of motivations for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this method if you know where to look (learn more here).

Keeping this in mind, it’s important to take a gander at the latest action surrounding NeoPhotonics Corp (NYSE:NPTN).

How have hedgies been trading NeoPhotonics Corp (NYSE:NPTN)?

At Q1’s end, a total of 6 of the hedge funds we track held long positions in this stock, a change of -14% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably.

According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the biggest position in NeoPhotonics Corp (NYSE:NPTN). Royce & Associates has a $5.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates’s heels is Richard Chilton of Chilton Investment Company, with a $4.1 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Christopher Zepf and Brian Thonn’s Kingdom Ridge Capital, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.

Due to the fact that NeoPhotonics Corp (NYSE:NPTN) has witnessed bearish sentiment from hedge fund managers, we can see that there was a specific group of fund managers that decided to sell off their positions entirely at the end of the first quarter. Intriguingly, Matthew Hulsizer’s PEAK6 Capital Management said goodbye to the biggest position of the 450+ funds we monitor, totaling an estimated $0.3 million in call options. Israel Englander’s fund, Millennium Management, also cut its stock, about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds at the end of the first quarter.

How are insiders trading NeoPhotonics Corp (NYSE:NPTN)?

Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time period, NeoPhotonics Corp (NYSE:NPTN) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the returns shown by the aforementioned strategies, retail investors should always monitor hedge fund and insider trading activity, and NeoPhotonics Corp (NYSE:NPTN) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds