This Metric Says You Are Smart to Sell Greatbatch Inc (GB)

Is Greatbatch Inc (NYSE:GB) a superb stock to buy now? Prominent investors are becoming less hopeful. The number of long hedge fund bets were trimmed by 3 recently.

To most market participants, hedge funds are seen as underperforming, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open today, we choose to focus on the elite of this group, close to 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total asset base, and by paying attention to their top investments, we have revealed a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, optimistic insider trading activity is another way to break down the financial markets. Obviously, there are a variety of stimuli for an insider to drop shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the impressive potential of this method if investors know where to look (learn more here).

With all of this in mind, let’s take a gander at the latest action regarding Greatbatch Inc (NYSE:GB).

What have hedge funds been doing with Greatbatch Inc (NYSE:GB)?

At Q1’s end, a total of 10 of the hedge funds we track held long positions in this stock, a change of -23% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Ric Dillon’s Diamond Hill Capital had the biggest position in Greatbatch Inc (NYSE:GB), worth close to $18.1 million, comprising 0.2% of its total 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $9.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management.

Judging by the fact that Greatbatch Inc (NYSE:GB) has experienced a declination in interest from hedge fund managers, it’s safe to say that there is a sect of funds who were dropping their entire stakes heading into Q2. At the top of the heap, Nathan Fischel’s DAFNA Capital Management said goodbye to the largest stake of all the hedgies we key on, worth an estimated $0.8 million in stock., and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund dumped about $0.7 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds heading into Q2.

Insider trading activity in Greatbatch Inc (NYSE:GB)

Insider trading activity, especially when it’s bullish, is most useful when the company in question has seen transactions within the past half-year. Over the latest half-year time period, Greatbatch Inc (NYSE:GB) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Greatbatch Inc (NYSE:GB). These stocks are NuVasive, Inc. (NASDAQ:NUVA), The Spectranetics Corporation (NASDAQ:SPNC), NxStage Medical, Inc. (NASDAQ:NXTM), Orthofix International NV (NASDAQ:OFIX), and ABIOMED, Inc. (NASDAQ:ABMD). This group of stocks belong to the medical appliances & equipment industry and their market caps resemble GB’s market cap.