Group 1 Automotive, Inc. (GPI): Insiders Are Dumping, Should You? – KAR Auction Services Inc (KAR), Lithia Motors Inc (LAD)

Group 1 Automotive, Inc. (NYSE:GPI) shareholders have witnessed a decrease in enthusiasm from smart money of late.

If you’d ask most investors, hedge funds are seen as underperforming, outdated investment tools of years past. While there are greater than 8000 funds in operation at the moment, we choose to focus on the moguls of this club, around 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing investments, we have determined a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat 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 trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as key, positive insider trading activity is another way to parse down the marketplace. As the old adage goes: there are plenty of motivations for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this strategy if piggybackers understand what to do (learn more here).

Now, we’re going to take a glance at the key action regarding Group 1 Automotive, Inc. (NYSE:GPI).

How have hedgies been trading Group 1 Automotive, Inc. (NYSE:GPI)?

In preparation for this year, a total of 11 of the hedge funds we track were bullish in this stock, a change of -8% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Patrick McCormack’s Tiger Consumer Management had the most valuable position in Group 1 Automotive, Inc. (NYSE:GPI), worth close to $31.3 million, accounting for 1.5% of its total 13F portfolio. On Tiger Consumer Management’s heels is Firefly Value Partners, managed by Ryan Heslop and Ariel Warszawski, which held a $28.8 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Jeffrey Vinik’s Vinik Asset Management, Israel Englander’s Millennium Management and Andrew Sandler’s Sandler Capital Management.

Because Group 1 Automotive, Inc. (NYSE:GPI) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers who were dropping their full holdings heading into 2013. At the top of the heap, Anand Parekh’s Alyeska Investment Group cut the biggest stake of all the hedgies we track, comprising an estimated $1.2 million in stock., and Ben Levine, Andrew Manuel and Stefan Renold of LMR Partners was right behind this move, as the fund said goodbye to about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds heading into 2013.

What do corporate executives and insiders think about Group 1 Automotive, Inc. (NYSE:GPI)?

Insider buying is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest half-year time period, Group 1 Automotive, Inc. (NYSE:GPI) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review 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). All of these stocks are in the auto dealerships industry and their market caps match GPI’s market cap.

Company Name	# of Hedge Funds	# of Insiders Buying	# of Insiders Selling
Penske Automotive Group, Inc. (NYSE:PAG)	9	0	0
KAR Auction Services Inc (NYSE:KAR)	15	0	17
Asbury Automotive Group, Inc. (NYSE:ABG)	15	0	4
Lithia Motors Inc (NYSE:LAD)	15	0	6
Sonic Automotive Inc (NYSE:SAH)	9	0	3

With the returns demonstrated by Insider Monkey’s strategies, retail investors should always watch hedge fund and insider trading activity, and Group 1 Automotive, Inc. (NYSE:GPI) applies perfectly to this mantra.

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