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Advance Auto Parts, Inc. (NYSE:AAP): Are Hedge Funds Right About This Stock?

Advance Auto Parts, Inc. (NYSE:AAP) investors should pay attention to an increase in hedge fund interest recently.

Advance Auto Parts Inc (NYSE:AAP)

In the financial world, there are dozens of gauges shareholders can use to monitor the equity markets. Two of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite money managers can outpace the S&P 500 by a solid amount (see just how much).

Equally as integral, positive insider trading sentiment is another way to parse down the marketplace. Just as you’d expect, there are plenty of stimuli for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).

Now, it’s important to take a glance at the key action encompassing Advance Auto Parts, Inc. (NYSE:AAP).

What does the smart money think about Advance Auto Parts, Inc. (NYSE:AAP)?

At the end of the fourth quarter, a total of 34 of the hedge funds we track held long positions in this stock, a change of 17% from the third 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 stakes significantly.

Of the funds we track, Ricky Sandler’s Eminence Capital had the largest position in Advance Auto Parts, Inc. (NYSE:AAP), worth close to $153 million billion, comprising 4.5% of its total 13F portfolio. The second largest stake is held by Merchants’ Gate Capital, managed by Jason Capello, which held a $124 million position; the fund has 5.6% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Ken Griffin’s Citadel Investment Group, James Dinan’s York Capital Management and Frank Brosens’s Taconic Capital.

Now, specific money managers were breaking ground themselves. York Capital Management, managed by James Dinan, assembled the most outsized position in Advance Auto Parts, Inc. (NYSE:AAP). York Capital Management had 76 million invested in the company at the end of the quarter. Frank Brosens’s Taconic Capital also made a $72 million investment in the stock during the quarter. The other funds with new positions in the stock are Richard Perry’s Perry Capital, Glenn Russell Dubin’s Highbridge Capital Management, and .

Insider trading activity in Advance Auto Parts, Inc. (NYSE:AAP)

Insider buying is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last six-month time frame, Advance Auto Parts, Inc. (NYSE:AAP) has experienced zero unique insiders buying, and 12 insider sales (see the details of insider trades here).

With the returns demonstrated by the aforementioned tactics, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Advance Auto Parts, Inc. (NYSE:AAP) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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