Do Hedge Funds and Insiders Love Novartis AG (ADR) (NYSE:NVS)?

Novartis AG (ADR) (NYSE:NVS) has experienced a decrease in activity from the world’s largest hedge funds of late.

Novartis AG (ADR) (NYSE:NVS)

At the moment, there are tons of gauges market participants can use to track the equity markets. A duo of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best money managers can trounce their index-focused peers by a solid amount (see just how much).

Equally as beneficial, bullish insider trading activity is a second way to break down the financial markets. Just as you’d expect, there are lots of stimuli for an executive to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the latest action encompassing Novartis AG (ADR) (NYSE:NVS).

What have hedge funds been doing with Novartis AG (ADR) (NYSE:NVS)?

At year’s end, a total of 18 of the hedge funds we track were long in this stock, a change of -28% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly.

Of the funds we track, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Novartis AG (ADR) (NYSE:NVS). Fisher Asset Management has a $319 million position in the stock, comprising 0.9% of its 13F portfolio. On Fisher Asset Management’s heels is John Osterweis of Osterweis Capital Management, with a $18 million position; 0% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Joseph Edelman’s Perceptive Advisors, and John Zaro’s Bourgeon Capital.

Judging by the fact that Novartis AG (ADR) (NYSE:NVS) has experienced a declination in interest from hedge fund managers, logic holds that there was a specific group of hedge funds who were dropping their positions entirely last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest stake of the “upper crust” of funds we key on, valued at an estimated $183 million in stock., and Peter J. Eichler Jr. of Aletheia Research and Management was right behind this move, as the fund sold off about $5 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 7 funds last quarter.

What do corporate executives and insiders think about Novartis AG (ADR) (NYSE:NVS)?

Bullish insider trading is particularly usable when the company in focus has seen transactions within the past six months. Over the last 180-day time period, Novartis AG (ADR) (NYSE:NVS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the returns demonstrated by Insider Monkey’s strategies, everyday investors must always watch hedge fund and insider trading activity, and Novartis AG (ADR) (NYSE:NVS) 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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