Diamond Foods, Inc. (NASDAQ:DMND) was in 11 hedge funds' portfolio at the end of December. DMND investors should be aware of a decrease in activity from the world's largest hedge funds recently. There were 11 hedge funds in our database with DMND holdings at the end of the previous quarter.
To most market participants, hedge funds are assumed to be worthless, outdated financial tools of the past. While there are over 8000 funds in operation today, we at Insider Monkey hone in on the moguls of this club, around 450 funds. Most estimates calculate that this group controls most of the smart money's total capital, and by watching their top stock picks, we have deciphered a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as key, bullish insider trading activity is another way to parse down the stock market universe. Just as you'd expect, there are a variety of incentives for an insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this tactic if "monkeys" understand what to do (learn more here).
With all of this in mind, it's important to take a gander at the key action surrounding Diamond Foods, Inc. (NASDAQ:DMND).
At year's end, a total of 11 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes substantially.
Of the funds we track, Litespeed Management, managed by Jamie Zimmerman, holds the most valuable position in Diamond Foods, Inc. (NASDAQ:DMND). Litespeed Management has a $30 million position in the stock, comprising 10.1% of its 13F portfolio. Sitting at the No. 2 spot is Bill & Melinda Gates Foundation Trust, managed by Michael Larson, which held a $6 million position; the fund has 0% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Ric Dillon's Diamond Hill Capital, Mario Gabelli's GAMCO Investors and Daniel S. Och's OZ Management.
Seeing as Diamond Foods, Inc. (NASDAQ:DMND) has experienced bearish sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of hedge funds that decided to sell off their full holdings at the end of the year. It's worth mentioning that Ken Fisher's Fisher Asset Management dropped the biggest stake of the "upper crust" of funds we track, totaling about $4 million in stock.. Matt Sirovich and Jeremy Mindich's fund, Scopia Capital, also said goodbye to its stock, about $2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying is most useful when the company we're looking at has experienced transactions within the past 180 days. Over the last 180-day time period, Diamond Foods, Inc. (NASDAQ:DMND) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
With the returns exhibited by the aforementioned strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Diamond Foods, Inc. (NASDAQ:DMND) is an important part of this process.
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.