Hedge Funds Are Buying Oplink Communications, Inc (OPLK)
Is it smart to be bullish on Oplink Communications, Inc (NASDAQ:OPLK)?
In the eyes of many investors, hedge funds are assumed to be useless, old investment tools of an era lost to time. Although there are more than 8,000 hedge funds trading currently, this site focuses on the bigwigs of this group, around 525 funds. It is widely held that this group oversees most of all hedge funds' total assets, and by keeping an eye on their highest quality stock picks, we've identified a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've started 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 the details here).
Just as key, optimistic insider trading activity is a second way to look at the stock market universe. There are a variety of incentives for an insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if "monkeys" understand where to look (learn more here).
What's more, it's important to examine the latest info surrounding Oplink Communications, Inc (NASDAQ:OPLK).
How have hedgies been trading Oplink Communications, Inc (NASDAQ:OPLK)?
In preparation for the third quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 25% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes significantly.
Out of the hedge funds we follow, Chuck Royce's Royce & Associates had the biggest position in Oplink Communications, Inc (NASDAQ:OPLK), worth close to $15.4 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Becker Drapkin Management, managed by Matthew Drapkin and Steven R. Becker, which held a $2.7 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Peter Rathjens Bruce Clarke and John Campbell's Arrowstreet Capital, Jim Simons's Renaissance Technologies and Cliff Asness's AQR Capital Management.
With a general bullishness amongst the titans, specific money managers have been driving this bullishness. Royce & Associates, managed by Chuck Royce, established the largest position in Oplink Communications, Inc (NASDAQ:OPLK). Royce & Associates had 15.4 million invested in the company at the end of the quarter. Matthew Drapkin and Steven R. Becker's Becker Drapkin Management also made a $2.7 million investment in the stock during the quarter. The following funds were also among the new OPLK investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Jim Simons's Renaissance Technologies, and Cliff Asness's AQR Capital Management.
What do corporate executives and insiders think about Oplink Communications, Inc (NASDAQ:OPLK)?
Insider buying is at its handiest when the company in question has experienced transactions within the past six months. Over the last six-month time frame, Oplink Communications, Inc (NASDAQ:OPLK) has seen 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 Oplink Communications, Inc (NASDAQ:OPLK). These stocks are Volterra Semiconductor Corporation (NASDAQ:VLTR), Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE), Audience Inc (NASDAQ:ADNC), ParkerVision, Inc. (NASDAQ:PRKR), and Peregrine Semiconductor Corp (NASDAQ:PSMI). This group of stocks are the members of the semiconductor - integrated circuits industry and their market caps resemble OPLK's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Volterra Semiconductor Corporation (NASDAQ:VLTR)
Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE)
Audience Inc (NASDAQ:ADNC)
ParkerVision, Inc. (NASDAQ:PRKR)
Peregrine Semiconductor Corp (NASDAQ:PSMI)
Using the results explained by the previously mentioned studies, regular investors must always track hedge fund and insider trading activity, and Oplink Communications, Inc (NASDAQ:OPLK) is no exception.