Is Aeropostale, Inc. (NYSE:ARO) an attractive investment today? Money managers are betting on the stock. The number of bullish hedge fund positions improved by 8 recently. However, not everyone is optimistic about the company. An example is Goldman, which earlier today cut its ranking for Aeropostale.
In the eyes of most traders, hedge funds are viewed as slow, old financial tools of yesteryear. While there are more than 8000 funds in operation today, we at Insider Monkey look at the elite of this club, close to 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total capital, and by tracking their best stock picks, we have determined a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per 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 outclassed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as important, bullish insider trading activity is another way to parse down the marketplace. Obviously, there are a number of reasons for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand where to look (learn more here).
With all of this in mind, let’s take a peek at the recent action surrounding Aeropostale, Inc. (NYSE:ARO).
Hedge fund activity in Aeropostale, Inc. (NYSE:ARO)
Heading into 2013, a total of 27 of the hedge funds we track were bullish in this stock, a change of 42% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.
Of the funds we track, Richard S. Pzena’s Pzena Investment Management had the largest position in Aeropostale, Inc. (NYSE:ARO), worth close to $27.3 million, comprising 0.2% of its total 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $21.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and Anthony Bozza’s Lakewood Capital Management.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Sheffield Asset Management, managed by Craig C. Albert, initiated the biggest position in Aeropostale, Inc. (NYSE:ARO). Sheffield Asset Management had 4.7 million invested in the company at the end of the quarter. John Murphy’s Alydar Capital also made a $3.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Kingdon’s Kingdon Capital, Neil Chriss’s Hutchin Hill Capital, and Dmitry Balyasny’s Balyasny Asset Management.
What do corporate executives and insiders think about Aeropostale, Inc. (NYSE:ARO)?
Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past half-year. Over the latest 180-day time frame, Aeropostale, Inc. (NYSE:ARO) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Aeropostale, Inc. (NYSE:ARO). These stocks are Stage Stores Inc (NYSE:SSI), Ann Inc (NYSE:ANN), Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), The Jones Group Inc. (NYSE:JNY), and Children’s Place Retail Stores, Inc. (NASDAQ:PLCE). This group of stocks are in the apparel stores industry and their market caps resemble ARO’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Stage Stores Inc (NYSE:SSI)||15||0||4|
|Ann Inc (NYSE:ANN)||20||1||2|
|Jos. A. Bank Clothiers Inc (NASDAQ:JOSB)||9||0||2|
|The Jones Group Inc. (NYSE:JNY)||13||0||3|
|Children’s Place Retail Stores, Inc. (NASDAQ:PLCE)||18||1||3|
With the results demonstrated by the aforementioned tactics, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Aeropostale, Inc. (NYSE:ARO) is an important part of this process.