Green Dot Corporation (NYSE:GDOT) investors should pay attention to a decrease in activity from the world's largest hedge funds lately.
If you'd ask most market participants, hedge funds are perceived as underperforming, outdated financial tools of yesteryear. While there are more than 8000 funds trading at the moment, we hone in on the masters of this group, close to 450 funds. Most estimates calculate that this group has its hands on the lion's share of all hedge funds' total asset base, and by monitoring their highest performing picks, we have found a few investment strategies that have historically outperformed the S&P 500 index. 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as key, positive insider trading sentiment is a second way to break down the marketplace. Obviously, there are a variety of reasons for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if investors know what to do (learn more here).
With these "truths" under our belt, we're going to take a gander at the key action encompassing Green Dot Corporation (NYSE:GDOT).
At the end of the first quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of -13% from the previous quarter. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Joseph A. Jolson's Harvest Capital Strategies had the largest position in Green Dot Corporation (NYSE:GDOT), worth close to $25.6 million, comprising 1.9% of its total 13F portfolio. The second largest stake is held by QVT Financial, managed by Daniel Gold, which held a $9.2 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Mario Cibelli's Marathon Partners, Joel Greenblatt's Gotham Asset Management and Jim Simons's Renaissance Technologies.
Judging by the fact that Green Dot Corporation (NYSE:GDOT) has faced falling interest from hedge fund managers, it's easy to see that there were a few money managers who were dropping their entire stakes in Q1. Intriguingly, Debra Fine's Fine Capital Partners cut the largest position of the 450+ funds we monitor, totaling an estimated $10.8 million in stock.. Ken Grossman and Glen Schneider's fund, SG Capital Management, also said goodbye to its stock, about $5.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds in Q1.
Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last six-month time frame, Green Dot Corporation (NYSE:GDOT) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's also review hedge fund and insider activity in other stocks similar to Green Dot Corporation (NYSE:GDOT). These stocks are Performant Financial Corp (NASDAQ:PFMT), American Public Education, Inc. (NASDAQ:APEI), Comverse Inc (NASDAQ:CNSI), COMSCORE, Inc. (NASDAQ:SCOR), and Examworks Group, Inc. (NYSE:EXAM). This group of stocks are the members of the business services industry and their market caps match GDOT's market cap.