Is China Mobile Ltd. (ADR) (NYSE:CHL) a buy right now? The smart money is becoming less hopeful. The number of long hedge fund bets decreased by 1 lately.
In the eyes of most shareholders, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are over 8000 funds in operation today, we hone in on the leaders of this club, close to 450 funds. It is widely believed that this group oversees most of the hedge fund industry's total capital, and by watching their top picks, we have determined a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as integral, bullish insider trading activity is another way to break down the marketplace. As the old adage goes: there are plenty of incentives for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this tactic if "monkeys" know where to look (learn more here).
With all of this in mind, it's important to take a gander at the key action surrounding China Mobile Ltd. (ADR) (NYSE:CHL).
Heading into 2013, a total of 14 of the hedge funds we track held long positions in this stock, a change of -7% from the third quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their holdings meaningfully.
Of the funds we track, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in China Mobile Ltd. (ADR) (NYSE:CHL). Fisher Asset Management has a $225 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $53 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Ranjan Tandon's Libra Advisors, Cliff Asness's AQR Capital Management and Ken Griffin's Citadel Investment Group.
Due to the fact that China Mobile Ltd. (ADR) (NYSE:CHL) has witnessed declining sentiment from hedge fund managers, it's safe to say that there exists a select few funds that elected to cut their full holdings heading into 2013. At the top of the heap, John Kleinheinz's Kleinheinz Capital Partners sold off the largest stake of all the hedgies we watch, comprising close to $17 million in stock., and Sander Gerber of Hudson Bay Capital Management was right behind this move, as the fund dropped about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into 2013.
Insider purchases made by high-level executives is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time period, China Mobile Ltd. (ADR) (NYSE:CHL) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results demonstrated by the aforementioned studies, everyday investors must always watch hedge fund and insider trading activity, and China Mobile Ltd. (ADR) (NYSE:CHL) applies perfectly to this mantra.
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