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Hedge Funds Are Dumping Itau Unibanco Holding SA (ADR) (NYSE:ITUB)

Itau Unibanco Holding SA (ADR) (NYSE:ITUB) has seen a decrease in enthusiasm from smart money in recent months.

To most stock holders, hedge funds are seen as unimportant, outdated investment tools of the past. While there are greater than 8000 funds with their doors open today, we choose to focus on the upper echelon of this group, around 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total capital, and by paying attention to their best equity investments, we have unearthed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped 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 (see all of our picks from August).

Itau Unibanco Holding SA (ADR) (NYSE:ITUB)

Just as key, optimistic insider trading sentiment is a second way to parse down the marketplace. Just as you’d expect, there are many incentives for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this method if you understand where to look (learn more here).

Now, we’re going to take a glance at the recent action encompassing Itau Unibanco Holding SA (ADR) (NYSE:ITUB).

Hedge fund activity in Itau Unibanco Holding SA (ADR) (NYSE:ITUB)

At year’s end, a total of 23 of the hedge funds we track were bullish in this stock, a change of -4% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Itau Unibanco Holding SA (ADR) (NYSE:ITUB). Arrowstreet Capital has a $62 million position in the stock, comprising 0.3% of its 13F portfolio. On Arrowstreet Capital’s heels is D E Shaw, managed by D. E. Shaw, which held a $34 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Stanley Druckenmiller’s Duquesne Capital, Clint Carlson’s Carlson Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Seeing as Itau Unibanco Holding SA (ADR) (NYSE:ITUB) has witnessed declining sentiment from hedge fund managers, we can see that there lies a certain “tier” of money managers that decided to sell off their positions entirely at the end of the year. At the top of the heap, Rob Citrone’s Discovery Capital Management sold off the largest investment of all the hedgies we track, valued at about $15 million in stock, and Thomas E. Claugus of GMT Capital was right behind this move, as the fund dropped about $13 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds at the end of the year.

What do corporate executives and insiders think about Itau Unibanco Holding SA (ADR) (NYSE:ITUB)?

Insider buying is best served when the company in focus has experienced transactions within the past 180 days. Over the latest 180-day time frame, Itau Unibanco Holding SA (ADR) (NYSE:ITUB) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned tactics, retail investors should always pay attention to hedge fund and insider trading activity, and Itau Unibanco Holding SA (ADR) (NYSE:ITUB) shareholders fit into this picture quite nicely.

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.

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