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Do Hedge Funds and Insiders Love Barnes & Noble, Inc. (NYSE:BKS)?

Is Barnes & Noble, Inc. (NYSE:BKS) a healthy stock for your portfolio? The best stock pickers are taking an optimistic view. The number of long hedge fund bets rose by 2 recently.

Barnes & Noble, Inc. (NYSE:BKS)

If you’d ask most shareholders, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey hone in on the masters of this club, about 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total asset base, and by tracking their best equity investments, we have revealed a number of investment strategies that have historically beaten Mr. Market. 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 topped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Equally as beneficial, bullish insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are lots of stimuli for an insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the useful potential of this tactic if “monkeys” understand where to look (learn more here).

With all of this in mind, let’s take a peek at the recent action encompassing Barnes & Noble, Inc. (NYSE:BKS).

What have hedge funds been doing with Barnes & Noble, Inc. (NYSE:BKS)?

In preparation for this year, a total of 18 of the hedge funds we track were bullish in this stock, a change of 13% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially.

Of the funds we track, Michael Blitzer’s Kingstown Capital Management had the biggest position in Barnes & Noble, Inc. (NYSE:BKS), worth close to $20 million, accounting for 3.9% of its total 13F portfolio. Coming in second is Steven Cohen of SAC Capital Advisors, with a $16 million position; 0.6% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Michael Price’s MFP Investors, Paul Tudor Jones’s Tudor Investment Corp and Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management.

Now, specific money managers have jumped into Barnes & Noble, Inc. (NYSE:BKS) headfirst. Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, created the most valuable position in Barnes & Noble, Inc. (NYSE:BKS). Nantahala Capital Management had 4 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also made a $3 million investment in the stock during the quarter. The following funds were also among the new BKS investors: Neil Chriss’s Hutchin Hill Capital, Sander Gerber’s Hudson Bay Capital Management, and Joel Greenblatt’s Gotham Asset Management.

What have insiders been doing with Barnes & Noble, Inc. (NYSE:BKS)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the latest six-month time period, Barnes & Noble, Inc. (NYSE:BKS) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

With the results shown by Insider Monkey’s studies, everyday investors should always monitor hedge fund and insider trading activity, and Barnes & Noble, Inc. (NYSE:BKS) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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.

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