Brookfield Asset Management Inc. (USA) (NYSE:BAM) was in 14 hedge funds’ portfolio at the end of the first quarter of 2013. BAM has seen a decrease in enthusiasm from smart money of late. There were 18 hedge funds in our database with BAM positions at the end of the previous quarter.
According to most shareholders, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we choose to focus on the masters of this club, around 450 funds. Most estimates calculate that this group has its hands on the majority of all hedge funds’ total asset base, and by monitoring their best equity investments, we have uncovered a number of investment strategies that have historically outpaced the broader indices. 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 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).
Equally as important, optimistic insider trading sentiment is another way to break down the marketplace. Just as you’d expect, there are many incentives for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Several empirical studies have demonstrated the valuable potential of this method if shareholders understand where to look (learn more here).
With all of this in mind, let’s take a peek at the recent action encompassing Brookfield Asset Management Inc. (USA) (NYSE:BAM).
What have hedge funds been doing with Brookfield Asset Management Inc. (USA) (NYSE:BAM)?
Heading into Q2, a total of 14 of the hedge funds we track held long positions in this stock, a change of -22% from the first quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, Martin Whitman’s Third Avenue Management had the most valuable position in Brookfield Asset Management Inc. (USA) (NYSE:BAM), worth close to $215.1 million, accounting for 4.1% of its total 13F portfolio. On Third Avenue Management’s heels is Select Equity Group, managed by Robert Joseph Caruso, which held a $190.3 million position; 2.5% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Tom Gayner’s Markel Gayner Asset Management, Lou Simpson’s SQ Advisors and Jim Simons’s Renaissance Technologies.
Due to the fact that Brookfield Asset Management Inc. (USA) (NYSE:BAM) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that elected to cut their positions entirely last quarter. Intriguingly, Murray Stahl’s Horizon Asset Management dropped the largest investment of the 450+ funds we monitor, totaling an estimated $138.7 million in stock.. Christian Leone’s fund, Luxor Capital Group, also cut its stock, about $92.1 million worth. These moves are important to note, as total hedge fund interest fell by 4 funds last quarter.
How have insiders been trading Brookfield Asset Management Inc. (USA) (NYSE:BAM)?
Bullish insider trading is most useful when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Brookfield Asset Management Inc. (USA) (NYSE:BAM) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Brookfield Asset Management Inc. (USA) (NYSE:BAM). These stocks are Brookfield Residential Properties Inc (NYSE:BRP), The St. Joe Company (NYSE:JOE), American Realty Capital Properties Inc (NASDAQ:ARCP), and Howard Hughes Corp (NYSE:HHC). This group of stocks belong to the real estate development industry and their market caps are similar to BAM’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Brookfield Residential Properties Inc (NYSE:BRP) | 12 | 0 | 0 |
| The St. Joe Company (NYSE:JOE) | 14 | 0 | 1 |
| American Realty Capital Properties Inc (NASDAQ:ARCP) | 19 | 6 | 2 |
| Howard Hughes Corp (NYSE:HHC) | 20 | 0 | 0 |
With the returns demonstrated by the aforementioned tactics, everyday investors must always monitor hedge fund and insider trading activity, and Brookfield Asset Management Inc. (USA) (NYSE:BAM) shareholders fit into this picture quite nicely.
