Hedge Funds Aren’t Crazy About Spansion Inc. (CODE) Anymore
Is Spansion Inc. (NYSE:CODE) a good investment?
In the eyes of many traders, hedge funds are viewed as overrated, outdated financial tools of an era lost to time. Although there are more than 8,000 hedge funds with their doors open in present day, this site looks at the moguls of this club, around 525 funds. It is widely held that this group controls most of the smart money's total assets, and by keeping an eye on their highest performing stock picks, we've figured out a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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).
Just as necessary, bullish insider trading activity is a second way to look at the financial markets. Just as you'd expect, there are plenty of motivations for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this strategy if investors know where to look (learn more here).
Thus, it's important to discuss the newest info for Spansion Inc. (NYSE:CODE).
How have hedgies been trading Spansion Inc. (NYSE:CODE)?
At the end of the second quarter, a total of 22 of the hedge funds we track were long in this stock, a change of -4% from one quarter earlier. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly.
According to our 13F database, Chilton Investment Company, managed by Richard Chilton, holds the biggest position in Spansion Inc. (NYSE:CODE). Chilton Investment Company has a $58.6 million position in the stock, comprising 1.6% of its 13F portfolio. Sitting at the No. 2 spot is International Value Advisers, managed by Charles de Vaulx, which held a $31.1 million position; 0.8% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Chuck Royce's Royce & Associates, Michael Novogratz's Fortress Investment Group and Cliff Asness's AQR Capital Management.
Judging by the fact that Spansion Inc. (NYSE:CODE) has faced dropping sentiment from the smart money's best and brightest, it's easy to see that there exists a select few hedgies that decided to sell off their positions entirely in Q1. It's worth mentioning that Peter S. Park's Park West Asset Management dropped the largest position of the "upper crust" of funds we track, comprising about $14.7 million in stock. Christopher Pucillo's fund, Solus Alternative Asset Management, also sold off its stock, about $9.5 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds in Q1.
What have insiders been doing with Spansion Inc. (NYSE:CODE)?
Insider buying made by high-level executives is particularly usable when the company we're looking at has experienced transactions within the past half-year. Over the latest six-month time frame, Spansion Inc. (NYSE:CODE) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to Spansion Inc. (NYSE:CODE). These stocks are Netlist, Inc. (NASDAQ:NLST), SemiLEDs Corporation (NASDAQ:LEDS), Micron Technology, Inc. (NASDAQ:MU), Integrated Silicon Solution, Inc. (NASDAQ:ISSI), and Rambus Inc. (NASDAQ:RMBS). All of these stocks are in the semiconductor- memory chips industry and their market caps are similar to CODE's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Netlist, Inc. (NASDAQ:NLST)
SemiLEDs Corporation (NASDAQ:LEDS)
Micron Technology, Inc. (NASDAQ:MU)
Integrated Silicon Solution, Inc. (NASDAQ:ISSI)
Rambus Inc. (NASDAQ:RMBS)
Using the returns demonstrated by our studies, average investors should always watch hedge fund and insider trading activity, and Spansion Inc. (NYSE:CODE) is an important part of this process.