Is ZHONGPIN INC. (NASDAQ:HOGS) undervalued? Investors who are in the know are becoming hopeful. The number of long hedge fund bets rose by 7 lately.
According to most market participants, hedge funds are perceived as underperforming, outdated financial tools of yesteryear. While there are over 8000 funds in operation at present, we at Insider Monkey look at the aristocrats of this club, around 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total capital, and by paying attention to their highest performing stock picks, we have discovered a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as important, optimistic insider trading sentiment is a second way to break down the marketplace. There are many reasons for a bullish insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this method if investors know what to do (learn more here).
Consequently, we’re going to take a gander at the key action surrounding ZHONGPIN INC. (NASDAQ:HOGS).
What does the smart money think about ZHONGPIN INC. (NASDAQ:HOGS)?
At year’s end, a total of 12 of the hedge funds we track were bullish in this stock, a change of 140% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly.
According to our comprehensive database, Brian Taylor’s Pine River Capital Management had the most valuable position in ZHONGPIN INC. (NASDAQ:HOGS), worth close to $16 million, accounting for 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Pentwater Capital Management, managed by Matthew Halbower, which held a $12 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers that are bullish include Charles Clough’s Clough Capital Partners, John Arnold’s Centaurus Advisors and Sander Gerber’s Hudson Bay Capital Management.
Consequently, some big names were breaking ground themselves. Pentwater Capital Management, managed by Matthew Halbower, initiated the biggest position in ZHONGPIN INC. (NASDAQ:HOGS). Pentwater Capital Management had 12 million invested in the company at the end of the quarter. John Arnold’s Centaurus Advisors also made a $2 million investment in the stock during the quarter. The following funds were also among the new HOGS investors: Sander Gerber’s Hudson Bay Capital Management, Brian Stark’s Stark Investments, and Paul Touradji’s TOURADJI CAPITAL MANAGEMENT, LP.
What have insiders been doing with ZHONGPIN INC. (NASDAQ:HOGS)?
Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past 180 days. Over the latest half-year time period, ZHONGPIN INC. (NASDAQ:HOGS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to ZHONGPIN INC. (NASDAQ:HOGS). These stocks are Cal-Maine Foods Inc (NASDAQ:CALM), Dole Food Company, Inc. (NYSE:DOLE), Amira Nature Foods Ltd (NYSE:ANFI), Annies Inc (NYSE:BNNY), and Central Garden & Pet Co (NASDAQ:CENT). This group of stocks belong to the food – major diversified industry and their market caps are closest to HOGS’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Cal-Maine Foods Inc (NASDAQ:CALM)||9||0||1|
|Dole Food Company, Inc. (NYSE:DOLE)||15||0||2|
|Amira Nature Foods Ltd (NYSE:ANFI)||4||0||0|
|Annies Inc (NYSE:BNNY)||10||1||6|
|Central Garden & Pet Co (NASDAQ:CENT)||6||0||1|
With the returns demonstrated by our research, everyday investors must always monitor hedge fund and insider trading activity, and ZHONGPIN INC. (NASDAQ:HOGS) shareholders fit into this picture quite nicely.