In the eyes of most shareholders, hedge funds are perceived as underperforming, old financial vehicles of yesteryear. While there are greater than 8000 funds trading at present, we hone in on the leaders of this group, close to 450 funds. Most estimates calculate that this group has its hands on most of the hedge fund industry’s total capital, and by watching their best investments, we have uncovered a few investment strategies that have historically outpaced Mr. Market. 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 topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as beneficial, bullish insider trading sentiment is another way to parse down the world of equities. There are plenty of stimuli for an insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the useful potential of this method if piggybackers understand what to do (learn more here).
Keeping this in mind, let’s take a gander at the recent action encompassing General Mills, Inc. (NYSE:GIS).
How have hedgies been trading General Mills, Inc. (NYSE:GIS)?
At the end of the first quarter, a total of 34 of the hedge funds we track were bullish in this stock, a change of 31% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Ric Dillon’s Diamond Hill Capital had the most valuable position in General Mills, Inc. (NYSE:GIS), worth close to $181.6 million, comprising 1.9% of its total 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which held a $140.1 million position; 0.9% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Ken Griffin’s Citadel Investment Group, and Israel Englander’s Millennium Management.
As industrywide interest jumped, some big names were leading the bulls’ herd. Jabre Capital Partners, managed by Philippe Jabre, initiated the biggest call position in General Mills, Inc. (NYSE:GIS). Jabre Capital Partners had 29.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $27.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Kingdon’s Kingdon Capital, D. E. Shaw’s D E Shaw, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Insider trading activity in General Mills, Inc. (NYSE:GIS)
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the last six-month time frame, General Mills, Inc. (NYSE:GIS) has experienced zero unique insiders buying, and 10 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to General Mills, Inc. (NYSE:GIS). These stocks are The J.M. Smucker Company (NYSE:SJM), Campbell Soup Company (NYSE:CPB), ConAgra Foods, Inc. (NYSE:CAG), Mead Johnson Nutrition CO (NYSE:MJN), and Kellogg Company (NYSE:K). This group of stocks belong to the processed & packaged goods industry and their market caps are closest to GIS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| The J.M. Smucker Company (NYSE:SJM) | 22 | 0 | 8 |
| Campbell Soup Company (NYSE:CPB) | 16 | 0 | 7 |
| ConAgra Foods, Inc. (NYSE:CAG) | 30 | 0 | 6 |
| Mead Johnson Nutrition CO (NYSE:MJN) | 39 | 1 | 2 |
| Kellogg Company (NYSE:K) | 18 | 0 | 9 |
With the results demonstrated by the aforementioned time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and General Mills, Inc. (NYSE:GIS) shareholders fit into this picture quite nicely.
