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Do Hedge Funds and Insiders Love TD Ameritrade Holding Corp. (AMTD)?

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Is it smart to be bullish on TD Ameritrade Holding Corp. (NYSE:AMTD)?

In the eyes of many traders, hedge funds are seen as bloated, outdated investment tools of an era lost to time. Although there are more than 8,000 hedge funds with their doors open currently, Insider Monkey looks at the aristocrats of this group, about 525 funds. It is widely held that this group has its hands on the lion’s share of all hedge funds’ total assets, and by watching their highest performing investments, we’ve found a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year 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 outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Just as key, optimistic insider trading activity is a second way to analyze the financial markets. There are plenty of reasons for an insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if you know where to look (learn more here).

Thus, let’s discuss the latest info for TD Ameritrade Holding Corp. (NYSE:AMTD).

TD Ameritrade Holding Corp. (NYSE:AMTD)

How are hedge funds trading TD Ameritrade Holding Corp. (NYSE:AMTD)?

At the end of the second quarter, a total of 19 of the hedge funds we track were bullish in this stock, a change of 6% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially.

Out of the hedge funds we follow, Natixis Global Asset Management’s Harris Associates had the largest position in TD Ameritrade Holding Corp. (NYSE:AMTD), worth close to $328.9 million, comprising 0.7% of its total 13F portfolio. Coming in second is Select Equity Group, managed by Robert Joseph Caruso, which held a $203.6 million call position; 2.9% of its 13F portfolio is allocated to the stock. Some other hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, Robert Joseph Caruso’s Select Equity Group and Charles Akre’s Akre Capital Management.

With a general bullishness amongst the titans, certain bigger names were leading the bulls’ herd. Select Equity Group, managed by Robert Joseph Caruso, initiated the most outsized call position in TD Ameritrade Holding Corp. (NYSE:AMTD). Select Equity Group had 203.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $200.9 million position during the quarter. The other funds with new positions in the stock are Robert Joseph Caruso’s Select Equity Group, Charles Akre’s Akre Capital Management, and Brian Taylor’s Pine River Capital Management.

How are insiders trading TD Ameritrade Holding Corp. (NYSE:AMTD)?

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past 180 days. Over the last six-month time period, TD Ameritrade Holding Corp. (NYSE:AMTD) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to TD Ameritrade Holding Corp. (NYSE:AMTD). These stocks are E TRADE Financial Corporation (NASDAQ:ETFC), LPL Financial Holdings Inc (NASDAQ:LPLA), Nomura Holdings, Inc. (ADR) (NYSE:NMR), Charles Schwab Corp (NYSE:SCHW), and CME Group Inc (NASDAQ:CME). This group of stocks belong to the investment brokerage – national industry and their market caps match AMTD’s market cap.

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