Is Ballantyne Strong Inc (NYSEAMEX:BTN) an excellent investment now? Hedge funds are turning less bullish. The number of long hedge fund positions went down by 2 in recent months.
If you'd ask most shareholders, hedge funds are seen as unimportant, old financial tools of yesteryear. While there are greater than 8000 funds in operation today, we at Insider Monkey choose to focus on the bigwigs of this group, around 450 funds. It is estimated that this group oversees the lion's share of the hedge fund industry's total asset base, and by paying attention to their best picks, we have identified a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as beneficial, bullish insider trading activity is another way to parse down the financial markets. Obviously, there are many stimuli for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this tactic if investors know what to do (learn more here).
With all of this in mind, it's important to take a peek at the latest action surrounding Ballantyne Strong Inc (NYSEAMEX:BTN).
At Q1's end, a total of 6 of the hedge funds we track were long in this stock, a change of -25% from the previous quarter. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings meaningfully.
Of the funds we track, Ariel Investments, managed by John W. Rogers, holds the largest position in Ballantyne Strong Inc (NYSEAMEX:BTN). Ariel Investments has a $6.2 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which held a $1.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Jim Simons's Renaissance Technologies, Peter Algert and Kevin Coldiron's Algert Coldiron Investors and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk's GRT Capital Partners.
Since Ballantyne Strong Inc (NYSEAMEX:BTN) has witnessed falling interest from the aggregate hedge fund industry, it's safe to say that there is a sect of hedge funds who sold off their positions entirely last quarter. At the top of the heap, D. E. Shaw's D E Shaw cut the biggest investment of the 450+ funds we track, totaling about $0.2 million in stock., and Andy Redleaf of Whitebox Advisors was right behind this move, as the fund said goodbye to about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.
Insider trading activity, especially when it's bullish, is most useful when the company we're looking at has experienced transactions within the past half-year. Over the latest six-month time frame, Ballantyne Strong Inc (NYSEAMEX:BTN) has experienced 4 unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results demonstrated by the aforementioned research, retail investors should always monitor hedge fund and insider trading sentiment, and Ballantyne Strong Inc (NYSEAMEX:BTN) applies perfectly to this mantra.