Xyratex Ltd. (NASDAQ:XRTX) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months.
In the financial world, there are dozens of methods market participants can use to monitor publicly traded companies. A pair of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a significant amount (see just how much).
Just as important, bullish insider trading sentiment is a second way to parse down the world of equities. As the old adage goes: there are lots of reasons for an upper level exec 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 valuable potential of this tactic if investors understand where to look (learn more here).
Consequently, let’s take a peek at the latest action regarding Xyratex Ltd. (NASDAQ:XRTX).
How are hedge funds trading Xyratex Ltd. (NASDAQ:XRTX)?
Heading into 2013, a total of 7 of the hedge funds we track were long in this stock, a change of -36% from the third quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Brett Hendrickson’s Nokomis Capital had the biggest position in Xyratex Ltd. (NASDAQ:XRTX), worth close to $16.1 million, comprising 5.5% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $10.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors.
Because Xyratex Ltd. (NASDAQ:XRTX) has experienced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of hedgies who sold off their entire stakes in Q4. Interestingly, Jim Simons’s Renaissance Technologies cut the largest position of the 450+ funds we track, valued at an estimated $3.2 million in stock.. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $2.9 million worth. These moves are important to note, as total hedge fund interest was cut by 4 funds in Q4.
How are insiders trading Xyratex Ltd. (NASDAQ:XRTX)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time frame, Xyratex Ltd. (NASDAQ:XRTX) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Xyratex Ltd. (NASDAQ:XRTX). These stocks are OCZ Technology Group Inc. (NASDAQ:OCZ), Imation Corp. (NYSE:IMN), STEC, Inc. (NASDAQ:STEC), Datalink Corporation (NASDAQ:DTLK), and Quantum Corp (NYSE:QTM). All of these stocks are in the data storage devices industry and their market caps are similar to XRTX’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| OCZ Technology Group Inc. (NASDAQ:OCZ) | 6 | 0 | 0 |
| Imation Corp. (NYSE:IMN) | 11 | 0 | 0 |
| STEC, Inc. (NASDAQ:STEC) | 15 | 2 | 0 |
| Datalink Corporation (NASDAQ:DTLK) | 5 | 0 | 4 |
| Quantum Corp (NYSE:QTM) | 11 | 1 | 0 |
With the returns demonstrated by Insider Monkey’s strategies, everyday investors should always monitor hedge fund and insider trading sentiment, and Xyratex Ltd. (NASDAQ:XRTX) shareholders fit into this picture quite nicely.
