Tempur-Pedic International Inc. (NYSE:TPX) investors should be aware of a decrease in hedge fund sentiment recently.
At the moment, there are plenty of indicators investors can use to watch their holdings. A pair of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can trounce the S&P 500 by a significant margin (see just how much).
Equally as integral, bullish insider trading sentiment is a second way to parse down the stock market universe. Obviously, there are lots of incentives for an insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the market-beating potential of this tactic if shareholders understand where to look (learn more here).
Now, it's important to take a look at the recent action encompassing Tempur-Pedic International Inc. (NYSE:TPX).
Heading into 2013, a total of 15 of the hedge funds we track were long in this stock, a change of -12% from one quarter earlier. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably.
When looking at the hedgies we track, Chieftain Capital, managed by John Shapiro, holds the biggest position in Tempur-Pedic International Inc. (NYSE:TPX). Chieftain Capital has a $237 million position in the stock, comprising 18.8% of its 13F portfolio. Coming in second is Rehan Jaffer of H Partners Management, with a $95 million position; 8.8% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Patrick Degorce's Theleme Partners, Jorge Paulo Lemann's 3G Capital and Steven Cohen's SAC Capital Advisors.
Because Tempur-Pedic International Inc. (NYSE:TPX) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there is a sect of money managers that slashed their entire stakes heading into 2013. Interestingly, David Gallo's Valinor Management LLC cut the biggest position of the 450+ funds we track, totaling close to $22 million in stock., and James Dondero of Highland Capital Management was right behind this move, as the fund dropped about $7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into 2013.
Insider buying is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest six-month time frame, Tempur-Pedic International Inc. (NYSE:TPX) has experienced 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the results shown by Insider Monkey's studies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Tempur-Pedic International Inc. (NYSE:TPX) is an important part of this process.
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