In the financial world, there are tons of gauges shareholders can use to watch Mr. Market. Two of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can beat the S&P 500 by a very impressive margin (see just how much).
Equally as key, optimistic insider trading activity is another way to look at the financial markets. Just as you'd expect, there are plenty of stimuli for a corporate insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if investors know what to do (learn more here).
Thus, let's examine the latest info about PHH Corporation (NYSE:PHH).
Heading into Q3, a total of 23 of the hedge funds we track held long positions in this stock, a change of -23% from the first quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably.
When using filings from the hedgies we track, Matt Sirovich and Jeremy Mindich's Scopia Capital had the most valuable position in PHH Corporation (NYSE:PHH), worth close to $54.6 million, comprising 1.5% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $50.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Doug Silverman and Alexander Klabin's Senator Investment Group, Alan Fournier's Pennant Capital Management and Debra Fine's Fine Capital Partners.
Because PHH Corporation (NYSE:PHH) has faced declining interest from the smart money's best and brightest, we can see that there exists a select few funds who sold off their full holdings heading into Q2. At the top of the heap, Larry Foley and Paul Farrell's Bronson Point Partners dropped the biggest investment of all the hedgies we monitor, comprising close to $29 million in stock. Paul Ruddockáand Steve Heinz's fund, Lansdowne Partners, also cut its stock, about $18.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 7 funds heading into Q2.
Bullish insider trading is particularly usable when the company in question has experienced transactions within the past 180 days. Over the latest half-year time period, PHH Corporation (NYSE:PHH) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to PHH Corporation (NYSE:PHH). These stocks are CapitalSource, Inc. (NYSE:CSE), First Cash Financial Services, Inc. (NASDAQ:FCFS), Nelnet, Inc. (NYSE:NNI), Cash America International, Inc. (NYSE:CSH), and World Acceptance Corp. (NASDAQ:WRLD). This group of stocks are in the credit services industry and their market caps are closest to PHH's market cap.