According to most investors, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the elite of this group, close to 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total capital, and by watching their best stock picks, we have spotted a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as important, bullish insider trading sentiment is a second way to parse down the world of equities. As the old adage goes: there are many stimuli for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).
With these “truths” under our belt, it’s important to take a glance at the recent action surrounding Group 1 Automotive, Inc. (NYSE:GPI).
How have hedgies been trading Group 1 Automotive, Inc. (NYSE:GPI)?
In preparation for this quarter, a total of 20 of the hedge funds we track were long in this stock, a change of 54% from one quarter earlier. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably.
When looking at the hedgies we track, Clint Carlson’s Carlson Capital had the biggest position in Group 1 Automotive, Inc. (NYSE:GPI), worth close to $33.4 million, accounting for 0.5% of its total 13F portfolio. Coming in second is Tiger Consumer Management, managed by Patrick McCormack, which held a $25.4 million position; 1% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Ryan Heslop and Ariel Warszawski’s Firefly Value Partners, Ricky Sandler’s Eminence Capital and John Murphy’s Alydar Capital.
Now, key money managers were breaking ground themselves. Carlson Capital, managed by Clint Carlson, assembled the biggest position in Group 1 Automotive, Inc. (NYSE:GPI). Carlson Capital had 33.4 million invested in the company at the end of the quarter. Ricky Sandler’s Eminence Capital also initiated a $19.7 million position during the quarter. The other funds with new positions in the stock are John Murphy’s Alydar Capital, Ken Grossman and Glen Schneider’s SG Capital Management, and Jim Simons’s Renaissance Technologies.
How are insiders trading Group 1 Automotive, Inc. (NYSE:GPI)?
Bullish insider trading is particularly usable when the company in focus has seen transactions within the past half-year. Over the last 180-day time period, Group 1 Automotive, Inc. (NYSE:GPI) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Group 1 Automotive, Inc. (NYSE:GPI). These stocks are Penske Automotive Group, Inc. (NYSE:PAG), KAR Auction Services Inc (NYSE:KAR), Asbury Automotive Group, Inc. (NYSE:ABG), Lithia Motors Inc (NYSE:LAD), and Sonic Automotive Inc (NYSE:SAH). This group of stocks are in the auto dealerships industry and their market caps resemble GPI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Penske Automotive Group, Inc. (NYSE:PAG) | 15 | 0 | 0 |
| KAR Auction Services Inc (NYSE:KAR) | 24 | 0 | 17 |
| Asbury Automotive Group, Inc. (NYSE:ABG) | 16 | 0 | 5 |
| Lithia Motors Inc (NYSE:LAD) | 18 | 0 | 7 |
| Sonic Automotive Inc (NYSE:SAH) | 12 | 0 | 3 |
With the returns shown by our studies, everyday investors should always watch hedge fund and insider trading activity, and Group 1 Automotive, Inc. (NYSE:GPI) shareholders fit into this picture quite nicely.
