Hedge Funds Are Dumping American Eagle Outfitters (NYSE:AEO)

American Eagle Outfitters (NYSE:AEO) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late.

Most Popular Apparel Stocks

If you’d ask most market participants, hedge funds are assumed to be worthless, outdated financial vehicles of yesteryear. While there are greater than 8000 funds trading at present, we look at the bigwigs of this group, around 450 funds. It is widely believed that this group controls the lion’s share of all hedge funds’ total capital, and by paying attention to their highest performing equity investments, we have deciphered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Equally as beneficial, optimistic insider trading sentiment is another way to parse down the world of equities. As the old adage goes: there are a variety of reasons for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would buy. Various academic studies have demonstrated the useful potential of this method if piggybackers know where to look (learn more here).

With these “truths” under our belt, we’re going to take a peek at the recent action encompassing American Eagle Outfitters (NYSE:AEO).

How have hedgies been trading American Eagle Outfitters (NYSE:AEO)?

At year’s end, a total of 26 of the hedge funds we track were long in this stock, a change of -4% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in American Eagle Outfitters (NYSE:AEO). Royce & Associates has a $201 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $57 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and Donald Chiboucis’s Columbus Circle Investors.

Because American Eagle Outfitters (NYSE:AEO) has witnessed falling interest from hedge fund managers, it’s easy to see that there exists a select few fund managers who sold off their positions entirely heading into 2013. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management sold off the largest position of the “upper crust” of funds we watch, valued at close to $3 million in stock.. James Pallotta’s fund, Raptor Capital Management, also cut its stock, about $2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds heading into 2013.

What do corporate executives and insiders think about American Eagle Outfitters (NYSE:AEO)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time period, American Eagle Outfitters (NYSE:AEO) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned time-tested strategies, retail investors must always watch hedge fund and insider trading sentiment, and American Eagle Outfitters (NYSE:AEO) applies perfectly to this mantra.

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.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!