Shutterfly, Inc. (NASDAQ:SFLY) was in 31 hedge funds' portfolio at the end of March. SFLY has experienced an increase in support from the world's most elite money managers of late. There were 19 hedge funds in our database with SFLY holdings at the end of the previous quarter.
If you'd ask most stock holders, hedge funds are viewed as worthless, outdated investment vehicles of years past. While there are over 8000 funds with their doors open today, we at Insider Monkey choose to focus on the bigwigs of this group, close to 450 funds. Most estimates calculate that this group controls the lion's share of the hedge fund industry's total asset base, and by watching their top investments, we have unearthed a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as beneficial, bullish insider trading activity is another way to break down the stock market universe. Just as you'd expect, there are lots of stimuli for an insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this tactic if you know what to do (learn more here).
Now, we're going to take a glance at the recent action encompassing Shutterfly, Inc. (NASDAQ:SFLY).
Heading into Q2, a total of 31 of the hedge funds we track held long positions in this stock, a change of 63% from the first quarter. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.
Of the funds we track, George Soros's Soros Fund Management had the largest position in Shutterfly, Inc. (NASDAQ:SFLY), worth close to $112 million, accounting for 1.3% of its total 13F portfolio. Coming in second is Daruma Asset Management, managed by Mariko Gordon, which held a $71 million position; the fund has 3.6% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include John Murphy's Alydar Capital, Mario Cibelli's Marathon Partners and Donald Chiboucis's Columbus Circle Investors.
Now, specific money managers were breaking ground themselves. Columbus Circle Investors, managed by Donald Chiboucis, assembled the most valuable position in Shutterfly, Inc. (NASDAQ:SFLY). Columbus Circle Investors had 30.1 million invested in the company at the end of the quarter. Drew Cupps's Cupps Capital Management also initiated a $18.1 million position during the quarter. The other funds with brand new SFLY positions are Israel Englander's Millennium Management, John Overdeck and David Siegel's Two Sigma Advisors, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Insider buying is best served when the company in question has seen transactions within the past 180 days. Over the latest six-month time period, Shutterfly, Inc. (NASDAQ:SFLY) has seen zero unique insiders purchasing, and 10 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 Shutterfly, Inc. (NASDAQ:SFLY). These stocks are Sohu.com Inc (NASDAQ:SOHU), OpenTable Inc (NASDAQ:OPEN), Yelp Inc (NYSE:YELP), Kayak Software Corp (NASDAQ:KYAK), and InterXion Holding NV (NYSE:INXN). This group of stocks are the members of the internet information providers industry and their market caps resemble SFLY's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Sohu.com Inc (NASDAQ:SOHU)||15||0||1|
|OpenTable Inc (NASDAQ:OPEN)||15||0||4|
|Yelp Inc (NYSE:YELP)||23||0||16|
|Kayak Software Corp (NASDAQ:KYAK)||10||0||0|
|InterXion Holding NV (NYSE:INXN)||24||0||0|
With the returns exhibited by the aforementioned time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Shutterfly, Inc. (NASDAQ:SFLY) applies perfectly to this mantra.