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Arbitron Inc. (NYSE:ARB): Are Hedge Funds Right About This Stock?

Is Arbitron Inc. (NYSE:ARB) worth your attention right now? Prominent investors are getting more bullish. The number of long hedge fund bets increased by 8 lately.

In the eyes of most shareholders, hedge funds are seen as unimportant, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open at present, we look at the crème de la crème of this club, 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 keeping an eye on their top equity investments, we have deciphered a few investment strategies that have historically beaten the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Arbitron Inc. (NYSE:ARB)Just as integral, positive insider trading sentiment is a second way to parse down the investments you’re interested in. There are plenty of incentives for an executive to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this method if “monkeys” know where to look (learn more here).

Keeping this in mind, let’s take a look at the key action surrounding Arbitron Inc. (NYSE:ARB).

What have hedge funds been doing with Arbitron Inc. (NYSE:ARB)?

At the end of the fourth quarter, a total of 19 of the hedge funds we track were bullish in this stock, a change of 73% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Gates Capital Management, managed by Jeffrey Gates, holds the largest position in Arbitron Inc. (NYSE:ARB). Gates Capital Management has a $48 million position in the stock, comprising 3% of its 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which held a $22 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Clifton S. Robbins’s Blue Harbour Group, John Bader’s Halcyon Asset Management and Mario Gabelli’s GAMCO Investors.

Consequently, some big names have jumped into Arbitron Inc. (NYSE:ARB) headfirst. AQR Capital Management, managed by Cliff Asness, established the most outsized position in Arbitron Inc. (NYSE:ARB). AQR Capital Management had 22 million invested in the company at the end of the quarter. John Bader’s Halcyon Asset Management also made a $16 million investment in the stock during the quarter. The other funds with new positions in the stock are Jean-Marie Eveillard’s First Eagle Investment Management, Brian Taylor’s Pine River Capital Management, and Anand Parekh’s Alyeska Investment Group.

Insider trading activity in Arbitron Inc. (NYSE:ARB)

Insider buying is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time frame, Arbitron Inc. (NYSE:ARB) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

With the returns shown by our tactics, retail investors must always pay attention to hedge fund and insider trading activity, and Arbitron Inc. (NYSE:ARB) is an important part of this process.

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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