To many of your peers, hedge funds are viewed as useless, old financial tools of a forgotten age. Although there are over 8,000 hedge funds in operation currently, Insider Monkey aim at the top tier of this group, about 525 funds. It is widely held that this group has its hands on the lion’s share of all hedge funds’ total capital, and by keeping an eye on their best stock picks, we’ve identified a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as necessary, optimistic insider trading sentiment is a second way to analyze the financial markets. As the old adage goes: there are plenty of motivations for an upper level exec to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this strategy if you know where to look (learn more here).
Now that that’s out of the way, it’s important to study the newest info for Carter’s, Inc. (NYSE:CRI).
How are hedge funds trading Carter’s, Inc. (NYSE:CRI)?
At the end of the second quarter, a total of 36 of the hedge funds we track held long positions in this stock, a change of -8% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly.
Out of the hedge funds we follow, Chase Coleman and Feroz Dewan’s Tiger Global Management LLC had the biggest position in Carter’s, Inc. (NYSE:CRI), worth close to $296.3 million, comprising 5.2% of its total 13F portfolio. Coming in second is Viking Global, managed by Andreas Halvorsen, which held a $218.7 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Jonathan Auerbach’s Hound Partners, Alan Fournier’s Pennant Capital Management and Natixis Global Asset Management’s Harris Associates.
As Carter’s, Inc. (NYSE:CRI) has witnessed declining interest from the top-tier hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds who sold off their entire stakes last quarter. At the top of the heap, David Goel and Paul Ferri’s Matrix Capital Management cut the largest investment of all the hedgies we watch, worth about $170.4 million in stock. Jonathon Jacobson’s fund, Highfields Capital Management, also said goodbye to its stock, about $63.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds last quarter.
How have insiders been trading Carter’s, Inc. (NYSE:CRI)?
Insider buying made by high-level executives is best served when the company in question has experienced transactions within the past 180 days. Over the last half-year time frame, Carter’s, Inc. (NYSE:CRI) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to Carter’s, Inc. (NYSE:CRI). These stocks are Columbia Sportswear Company (NASDAQ:COLM), Under Armour Inc (NYSE:UA), Fifth & Pacific Companies Inc (NYSE:FNP), Gildan Activewear Inc (USA) (NYSE:GIL), and Hanesbrands Inc. (NYSE:HBI). This group of stocks are in the textile – apparel clothing industry and their market caps are similar to CRI’s market cap.