Is Wal-Mart Stores, Inc. (NYSE:WMT) the right pick for your portfolio? Investors who are in the know are in a bullish mood. The number of bullish hedge fund positions moved up by 2 recently.
To most traders, hedge funds are assumed to be slow, outdated investment tools of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey look at the top tier of this club, around 450 funds. Most estimates calculate that this group oversees most of the smart money's total capital, and by watching their best picks, we have figured out a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Just as beneficial, optimistic insider trading sentiment is a second way to break down the world of equities. Just as you'd expect, there are lots of stimuli for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this method if "monkeys" know what to do (learn more here).
With all of this in mind, let's take a peek at the latest action surrounding Wal-Mart Stores, Inc. (NYSE:WMT).
At the end of the fourth quarter, a total of 54 of the hedge funds we track were long in this stock, a change of 4% from the third quarter. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Warren Buffett's Berkshire Hathaway had the largest position in Wal-Mart Stores, Inc. (NYSE:WMT), worth close to $3.241 billion, comprising 4.3% of its total 13F portfolio. Coming in second is Bill & Melinda Gates Foundation Trust, managed by Michael Larson, which held a $758 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Boykin Curry's Eagle Capital Management, Donald Yacktman's Yacktman Asset Management and Jim Simons's Renaissance Technologies.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. Scout Capital Management, managed by James Crichton and Adam Weiss, established the largest call position in Wal-Mart Stores, Inc. (NYSE:WMT). Scout Capital Management had 68 million invested in the company at the end of the quarter. Daniel S. Och's OZ Management also made a $28 million investment in the stock during the quarter. The other funds with brand new WMT positions are John Fichthorn's Dialectic Capital Management, Mark Kingdon's Kingdon Capital, and Glenn Russell Dubin's Highbridge Capital Management.
Insider trading activity, especially when it's bullish, is particularly usable when the company we're looking at has experienced transactions within the past half-year. Over the latest half-year time period, Wal-Mart Stores, Inc. (NYSE:WMT) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
With the results shown by Insider Monkey's studies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Wal-Mart Stores, Inc. (NYSE:WMT) applies perfectly to this mantra.
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.