Hedge Funds Are Selling MTS Systems Corporation (MTSC)
Is MTS Systems Corporation (NASDAQ:MTSC) a good investment?
Now, according to many investors, hedge funds are perceived as overrated, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds in operation today, this site aim at the top tier of this group, around 525 funds. Analysts calculate that this group controls the majority of the hedge fund industry's total capital, and by paying attention to their highest performing picks, we've uncovered a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as key, bullish insider trading sentiment is a second way to analyze the financial markets. Obviously, there are a number of motivations for an executive to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this strategy if investors understand where to look (learn more here).
Thus, let's discuss the recent info about MTS Systems Corporation (NASDAQ:MTSC).
How are hedge funds trading MTS Systems Corporation (NASDAQ:MTSC)?
At the end of the second quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of -25% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes significantly.
Out of the hedge funds we follow, Royce & Associates, managed by Chuck Royce, holds the largest position in MTS Systems Corporation (NASDAQ:MTSC). Royce & Associates has a $52.7 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is John W. Rogers of Ariel Investments, with a $39.1 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Jim Simons's Renaissance Technologies, Cliff Asness's AQR Capital Management and D. E. Shaw's D E Shaw.
As MTS Systems Corporation (NASDAQ:MTSC) has experienced a fall in interest from the entirety of the hedge funds we track, it's safe to say that there exists a select few fund managers who sold off their full holdings last quarter. At the top of the heap, John Overdeck and David Siegel's Two Sigma Advisors dumped the largest stake of the "upper crust" of funds we track, worth about $1.7 million in stock, and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund sold off about $0.5 million worth. These moves are interesting, as total hedge fund interest fell by 2 funds last quarter.
How have insiders been trading MTS Systems Corporation (NASDAQ:MTSC)?
Bullish insider trading is best served when the company we're looking at has seen transactions within the past half-year. Over the latest six-month time frame, MTS Systems Corporation (NASDAQ:MTSC) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to MTS Systems Corporation (NASDAQ:MTSC). These stocks are Badger Meter, Inc. (NYSE:BMI), ESCO Technologies Inc. (NYSE:ESE), Ion Geophysical Corp (NYSE:IO), II-VI, Inc. (NASDAQ:IIVI), and Analogic Corporation (NASDAQ:ALOG). All of these stocks are in the scientific & technical instruments industry and their market caps are closest to MTSC's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Badger Meter, Inc. (NYSE:BMI)
ESCO Technologies Inc. (NYSE:ESE)
Ion Geophysical Corp (NYSE:IO)
II-VI, Inc. (NASDAQ:IIVI)
Analogic Corporation (NASDAQ:ALOG)
Using the returns shown by the previously mentioned research, regular investors should always watch hedge fund and insider trading sentiment, and MTS Systems Corporation (NASDAQ:MTSC) applies perfectly to this mantra.