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AmerisourceBergen Corp. (ABC): Hedge Funds and Insiders Are Bearish, What Should You Do?

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Is AmerisourceBergen Corp. (NYSE:ABC) going to take off soon? Investors who are in the know are turning less bullish. The number of long hedge fund bets were cut by 5 in recent months. An interesting update came this morning from Goldman, which announced about advancing AmerisourceBergen Corp. (NYSE:ABC) (check out what company was cut at Goldman today).

AmerisourceBergen Corp. (NYSE:ABC)To most traders, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we look at the moguls of this group, close to 450 funds. It is estimated that this group controls the lion’s share of the hedge fund industry’s total asset base, and by watching their highest performing picks, we have formulated a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as beneficial, positive insider trading sentiment is another way to break down the financial markets. As the old adage goes: there are lots of motivations for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the useful potential of this tactic if investors understand what to do (learn more here).

With all of this in mind, we’re going to take a look at the recent action surrounding AmerisourceBergen Corp. (NYSE:ABC).

What does the smart money think about AmerisourceBergen Corp. (NYSE:ABC)?

At the end of the fourth quarter, a total of 16 of the hedge funds we track were long in this stock, a change of -24% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes considerably.

Of the funds we track, Doug Silverman’s Senator Investment Group had the most valuable position in AmerisourceBergen Corp. (NYSE:ABC), worth close to $151.1 million, comprising 3.3% of its total 13F portfolio. Coming in second is Shannon River Fund Management, managed by Spencer M. Waxman, which held a $27 million position; 3.6% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Cliff Asness’s AQR Capital Management, David Harding’s Winton Capital Management and Ken Fisher’s Fisher Asset Management.

Due to the fact that AmerisourceBergen Corp. (NYSE:ABC) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies that decided to sell off their positions entirely heading into 2013. At the top of the heap, Robert Emil Zoellner’s Alpine Associates sold off the largest investment of the “upper crust” of funds we key on, worth about $270.8 million in stock., and Douglas Hirsch of Seneca Capital was right behind this move, as the fund said goodbye to about $13.5 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 5 funds heading into 2013.

What do corporate executives and insiders think about AmerisourceBergen Corp. (NYSE:ABC)?

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the last half-year time frame, AmerisourceBergen Corp. (NYSE:ABC) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to AmerisourceBergen Corp. (NYSE:ABC). These stocks are Omnicare, Inc. (NYSE:OCR), McKesson Corporation (NYSE:MCK), and Cardinal Health, Inc. (NYSE:CAH). All of these stocks are in the drugs wholesale industry and their market caps match ABC’s market cap.

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