This Metric Says You Are Smart to Sell Newport Corporation (NEWP)

Is it smart to be bullish on Newport Corporation (NASDAQ:NEWP)?

At the moment, there are plenty of gauges investors can use to analyze stocks. A couple of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite investment managers can outpace the market by a very impressive margin (see just how much).

Just as crucial, optimistic insider trading sentiment is another way to analyze the marketplace. There are a variety of motivations for an executive to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this method if you understand where to look (learn more here).

Now that that’s out of the way, let’s analyze the latest info surrounding Newport Corporation (NASDAQ:NEWP).

What have hedge funds been doing with Newport Corporation (NASDAQ:NEWP)?

At the end of the second quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -8% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully.

Out of the hedge funds we follow, Chuck Royce’s Royce & Associates had the largest position in Newport Corporation (NASDAQ:NEWP), worth close to $47.5 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Michael Kaufman of MAK Capital One, with a $8.4 million position; the fund has 2% of its 13F portfolio invested in the stock. Other peers that hold long positions include Joel Greenblatt’s Gotham Asset Management, Cliff Asness’s AQR Capital Management and Glenn Russell Dubin’s Highbridge Capital Management.

Because Newport Corporation (NASDAQ:NEWP) has experienced a fall in interest from the smart money’s best and brightest, we can see that there were a few fund managers who sold off their positions entirely heading into Q2. Interestingly, Thomas E. Claugus’s GMT Capital sold off the biggest stake of all the hedgies we key on, totaling an estimated $9.2 million in stock, and David Moradi of Anthion Management was right behind this move, as the fund said goodbye to about $1.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q2.

What have insiders been doing with Newport Corporation (NASDAQ:NEWP)?

Insider buying is best served when the company we’re looking at has seen transactions within the past half-year. Over the latest six-month time period, Newport Corporation (NASDAQ:NEWP) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Newport Corporation (NASDAQ:NEWP). These stocks are Edgen Group Inc (NYSE:EDG), Wesco Aircraft Holdings Inc (NYSE:WAIR), DXP Enterprises Inc (NASDAQ:DXPE), RTI International Metals, Inc. (NYSE:RTI), and Susser Petroleum Partners LP (NYSE:SUSP). This group of stocks are the members of the industrial equipment wholesale industry and their market caps are closest to NEWP’s market cap.

Using the results explained by the previously mentioned studies, regular investors must always keep one eye on hedge fund and insider trading activity, and Newport Corporation (NASDAQ:NEWP) shareholders fit into this picture quite nicely.

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Should You Buy Newport Corporation (NEWP)?

Hedge Fund Activity

Insider Trading Activity