Is Copart, Inc. (NASDAQ:CPRT) a cheap investment today? Investors who are in the know are in a pessimistic mood. The number of bullish hedge fund bets shrunk by 1 in recent months.
To most traders, hedge funds are perceived as slow, old financial tools of yesteryear. While there are more than 8000 funds trading at present, we at Insider Monkey look at the moguls of this group, around 450 funds. Most estimates calculate that this group oversees most of all hedge funds' total asset base, and by tracking their top picks, we have come up with a few 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 topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as important, optimistic insider trading activity is another way to parse down the stock market universe. Obviously, there are many incentives for a corporate insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this tactic if "monkeys" understand where to look (learn more here).
With these "truths" under our belt, it's important to take a glance at the latest action regarding Copart, Inc. (NASDAQ:CPRT).
At the end of the fourth quarter, a total of 21 of the hedge funds we track were bullish in this stock, a change of -5% from the previous quarter. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings meaningfully.
According to our comprehensive database, Barry Rosenstein's JANA Partners had the largest position in Copart, Inc. (NASDAQ:CPRT), worth close to $181 million, accounting for 5.1% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $110 million position; 5.1% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Ricky Sandler's Eminence Capital, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Lee Hobson's Highside Capital Management.
Because Copart, Inc. (NASDAQ:CPRT) has witnessed falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedgies that elected to cut their entire stakes last quarter. Intriguingly, Kenneth Mario Garschina's Mason Capital Management said goodbye to the largest investment of the "upper crust" of funds we monitor, valued at close to $55 million in stock., and Robert Rodriguez and Steven Romick of First Pacific Advisors LLC was right behind this move, as the fund dropped about $43 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds last quarter.
Insider trading activity, especially when it's bullish, is best served when the primary stock in question has experienced transactions within the past six months. Over the last six-month time frame, Copart, Inc. (NASDAQ:CPRT) has experienced zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey's studies, retail investors should always watch hedge fund and insider trading activity, and Copart, Inc. (NASDAQ:CPRT) is no exception.
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