ARM Holdings plc (ADR) (ARMH): One Indicator That May Have You Selling
ARM Holdings plc (ADR) (NASDAQ:ARMH) investors: listen up.
If you were to ask many of your peers, hedge funds are perceived as bloated, outdated investment vehicles of a forgotten age. Although there are more than 8,000 hedge funds with their doors open in present day, this site focuses on the elite of this group, around 525 funds. It is assumed that this group oversees the majority of all hedge funds' total assets, and by keeping an eye on their best investments, we've found a number of investment strategies that have historically outpaced 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 began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as useful, bullish insider trading activity is a second way to look at the world of equities. Just as you'd expect, there are many reasons for an insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this tactic if "monkeys" know what to do (learn more here).
Furthermore, let's study the recent info about ARM Holdings plc (ADR) (NASDAQ:ARMH).
What have hedge funds been doing with ARM Holdings plc (ADR) (NASDAQ:ARMH)?
At Q2's end, a total of 21 of the hedge funds we track held long positions in this stock, a change of -9% from the first quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.
According to our 13F database, Jim Simons's Renaissance Technologies had the largest position in ARM Holdings plc (ADR) (NASDAQ:ARMH), worth close to $95 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Paul Reeder and Edward Shapiro of PAR Capital Management, with a $30.3 million position; 0.8% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Daniel Benton's Andor Capital Management and Israel Englander's Millennium Management.
Since ARM Holdings plc (ADR) (NASDAQ:ARMH) has experienced a fall in interest from the entirety of the hedge funds we track, it's safe to say that there was a specific group of fund managers that decided to sell off their entire stakes in Q1. Intriguingly, Noam Gottesman's GLG Partners sold off the biggest stake of the 450+ funds we monitor, worth an estimated $26 million in stock. Daniel Benton's fund, Andor Capital Management, also said goodbye to its stock, about $23.3 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds in Q1.
How have insiders been trading ARM Holdings plc (ADR) (NASDAQ:ARMH)?
Legal insider trading, particularly when it's bullish, is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last six-month time period, ARM Holdings plc (ADR) (NASDAQ:ARMH) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to ARM Holdings plc (ADR) (NASDAQ:ARMH). These stocks are LSI Corp (NASDAQ:LSI), Microchip Technology Inc. (NASDAQ:MCHP), NVIDIA Corporation (NASDAQ:NVDA), Linear Technology Corporation (NASDAQ:LLTC), and Altera Corporation (NASDAQ:ALTR). All of these stocks are in the semiconductor - specialized industry and their market caps are similar to ARMH's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
LSI Corp (NASDAQ:LSI)
Microchip Technology Inc. (NASDAQ:MCHP)
NVIDIA Corporation (NASDAQ:NVDA)
Linear Technology Corporation (NASDAQ:LLTC)
Altera Corporation (NASDAQ:ALTR)
Using the returns explained by Insider Monkey's analyses, regular investors must always track hedge fund and insider trading sentiment, and ARM Holdings plc (ADR) (NASDAQ:ARMH) applies perfectly to this mantra.