Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) has seen a decrease in hedge fund sentiment in recent months.
In the eyes of most market participants, hedge funds are assumed to be unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey look at the crème de la crème of this club, close to 450 funds. It is estimated that this group controls most of the hedge fund industry's total asset base, and by tracking their highest performing picks, we have formulated a few investment strategies that have historically beaten the broader indices. 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as beneficial, optimistic insider trading activity is another way to break down the financial markets. Obviously, there are lots of motivations for an executive to sell shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this method if "monkeys" know what to do (learn more here).
Now, let's take a gander at the key action surrounding Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA).
At year's end, a total of 26 of the hedge funds we track were long in this stock, a change of -7% from one quarter earlier. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were increasing their holdings significantly.
According to our comprehensive database, Stephen Mandel's Lone Pine Capital had the largest position in Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), worth close to $416 million, comprising 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Brookside Capital, managed by Bain Capital, which held a $174 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Pasco Alfaro / Richard Tumure's Miura Global Management, Donald Chiboucis's Columbus Circle Investors and John Lykouretzos's Hoplite Capital Management.
Judging by the fact that Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) has faced falling interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers who were dropping their full holdings last quarter. It's worth mentioning that Douglas Dillard Jr. and Raj D. Venkatesan's Standard Pacific Capital sold off the largest position of the "upper crust" of funds we track, comprising about $81 million in stock., and Louis Navellier of Navellier & Associates was right behind this move, as the fund dumped about $62 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Insider buying is most useful when the company in question has experienced transactions within the past half-year. Over the latest half-year time frame, Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the returns shown by our time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) applies perfectly to this mantra.
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