DIRECTV (DTV): Hedge Funds and Insiders Are Bearish, What Should You Do?

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DIRECTV (NASDAQ:DTV)DIRECTV (NASDAQ:DTV) was in 45 hedge funds’ portfolio at the end of March. DTV has experienced a decrease in hedge fund interest recently. There were 48 hedge funds in our database with DTV positions at the end of the previous quarter.

To most stock holders, hedge funds are viewed as underperforming, old investment tools of the past. While there are greater than 8000 funds in operation today, we at Insider Monkey hone in on the bigwigs of this club, around 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total asset base, and by monitoring their best picks, we have deciphered a number of investment strategies that have historically outstripped the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as key, bullish insider trading activity is another way to break down the marketplace. Obviously, there are a variety of incentives for an executive to drop shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the useful potential of this strategy if investors understand what to do (learn more here).

With all of this in mind, it’s important to take a look at the key action surrounding DIRECTV (NASDAQ:DTV).

Hedge fund activity in DIRECTV (NASDAQ:DTV)

At the end of the first quarter, a total of 45 of the hedge funds we track were long in this stock, a change of -6% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially.

According to our comprehensive database, Berkshire Hathaway, managed by Warren Buffett, holds the largest position in DIRECTV (NASDAQ:DTV). Berkshire Hathaway has a $2.1094 billion position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Mason Hawkins of Southeastern Asset Management, with a $1.6336 billion position; the fund has 7.3% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Jonathon Jacobson’s Highfields Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Mario Gabelli’s GAMCO Investors.

Judging by the fact that DIRECTV (NASDAQ:DTV) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds that decided to sell off their entire stakes heading into Q2. It’s worth mentioning that Bain Capital’s Brookside Capital sold off the largest investment of the 450+ funds we track, valued at about $49.6 million in stock.. Roberto Mignone’s fund, Bridger Management, also sold off its stock, about $36.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds heading into Q2.

How have insiders been trading DIRECTV (NASDAQ:DTV)?

Insider buying is most useful when the primary stock in question has seen transactions within the past six months. Over the last half-year time period, DIRECTV (NASDAQ:DTV) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to DIRECTV (NASDAQ:DTV). These stocks are DISH Network Corp. (NASDAQ:DISH), Liberty Global Inc. (NASDAQ:LBTYA), Discovery Communications Inc. (NASDAQ:DISCA), Time Warner Cable Inc (NYSE:TWC), and Viacom, Inc. (NASDAQ:VIAB). This group of stocks are in the catv systems industry and their market caps are similar to DTV’s market cap.

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