International Paper Company (NYSE:IP) investors should pay attention to an increase in hedge fund interest in recent months.
To most stock holders, hedge funds are seen as slow, old financial tools of the past. While there are more than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the masters of this club, around 450 funds. It is estimated that this group controls the majority of the smart money’s total asset base, and by tracking their best picks, we have spotted a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as beneficial, positive insider trading sentiment is another way to break down the world of equities. There are a variety of reasons for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this method if investors understand what to do (learn more here).
Keeping this in mind, it’s important to take a look at the recent action encompassing International Paper Company (NYSE:IP).
Hedge fund activity in International Paper Company (NYSE:IP)
In preparation for this quarter, a total of 47 of the hedge funds we track were long in this stock, a change of 18% from the first quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Senator Investment Group, managed by Doug Silverman and Alexander Klabin, holds the biggest position in International Paper Company (NYSE:IP). Senator Investment Group has a $945.6 million call position in the stock, comprising 11.2% of its 13F portfolio. On Senator Investment Group’s heels is Dan Loeb of Third Point, with a $307.4 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Some other peers that are bullish include Doug Silverman and Alexander Klabin’s Senator Investment Group, David Cohen and Harold Levy’s Iridian Asset Management and Jeffrey Vinik’s Vinik Asset Management.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Capital Growth Management, managed by Ken Heebner, created the most valuable position in International Paper Company (NYSE:IP). Capital Growth Management had 32.6 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $22.7 million position during the quarter. The following funds were also among the new IP investors: Alexander Mitchell’s Scopus Asset Management, Michael Novogratz’s Fortress Investment Group, and Steven Tananbaum’s GoldenTree Asset Management.
Insider trading activity in International Paper Company (NYSE:IP)
Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past 180 days. Over the last half-year time period, International Paper Company (NYSE:IP) has seen zero unique insiders buying, and 13 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to International Paper Company (NYSE:IP). These stocks are KapStone Paper and Packaging Corp. (NYSE:KS), Resolute Forest Products Inc (NYSE:RFP), Domtar Corp (USA) (NYSE:UFS), and Fibria Celulose SA (ADR) (NYSE:FBR). This group of stocks are in the paper & paper products industry and their market caps are closest to IP’s market cap.