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Hedge Funds Are Crazy About H&R Block, Inc. (NYSE:HRB)

H&R Block, Inc. (NYSE:HRB) was in 25 hedge funds’ portfolio at the end of the fourth quarter of 2012. HRB has experienced an increase in hedge fund interest of late. There were 24 hedge funds in our database with HRB holdings at the end of the previous quarter.

If you’d ask most traders, hedge funds are assumed to be slow, outdated investment vehicles of years past. While there are over 8000 funds in operation today, we hone in on the bigwigs of this club, close to 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total capital, and by monitoring their best equity investments, we have determined a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 25 percentage points in 6.5 month (explore the details and some picks here).

H&R Block, Inc. (NYSE:HRB)Just as beneficial, positive insider trading sentiment is a second way to parse down the marketplace. As the old adage goes: there are a variety of stimuli for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this strategy if investors know where to look (learn more here).

Keeping this in mind, it’s important to take a look at the key action encompassing H&R Block, Inc. (NYSE:HRB).

Hedge fund activity in H&R Block, Inc. (NYSE:HRB)

In preparation for this year, a total of 25 of the hedge funds we track were bullish in this stock, a change of 4% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably.

According to our comprehensive database, Viking Global, managed by Andreas Halvorsen, holds the biggest position in H&R Block, Inc. (NYSE:HRB). Viking Global has a $427 million billion position in the stock, comprising 3% of its 13F portfolio. On Viking Global’s heels is Yacktman Asset Management, managed by Donald Yacktman, which held a $159 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Jean-Marie Eveillard’s First Eagle Investment Management, Charles Clough’s Clough Capital Partners and Yale M. Fergang and Robert W. Medway’s Royal Capital.

Consequently, specific money managers have been driving this bullishness. Scopus Asset Management, managed by Alexander Mitchell, established the biggest position in H&R Block, Inc. (NYSE:HRB). Scopus Asset Management had 7 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $1 million position during the quarter. The following funds were also among the new HRB investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Gray and Steve Walsh’s Bryn Mawr Capital, and Glenn Russell Dubin’s Highbridge Capital Management.

Insider trading activity in H&R Block, Inc. (NYSE:HRB)

Insider purchases made by high-level executives is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the latest half-year time frame, H&R Block, Inc. (NYSE:HRB) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the returns shown by Insider Monkey’s time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading activity, and H&R Block, Inc. (NYSE:HRB) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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