Is Altria Group Inc (NYSE:MO) the right pick for your portfolio? Investors who are in the know are becoming less hopeful. The number of long hedge fund bets were cut by 7 recently.
In the 21st century investor’s toolkit, there are many metrics market participants can use to watch stocks. A pair of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite fund managers can outclass the broader indices by a healthy margin (see just how much).
Equally as key, optimistic insider trading sentiment is another way to parse down the world of equities. Obviously, there are a variety of reasons for an insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Consequently, let's take a glance at the key action encompassing Altria Group Inc (NYSE:MO).
At the end of the fourth quarter, a total of 29 of the hedge funds we track held long positions in this stock, a change of -19% from the third quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly.
Of the funds we track, Tom Russo's Gardner Russo & Gardner had the most valuable position in Altria Group Inc (NYSE:MO), worth close to $220 million, accounting for 3% of its total 13F portfolio. The second largest stake is held by David Winters of Wintergreen Advisers, with a $88 million position; the fund has 11.6% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Phill Gross and Robert Atchinson's Adage Capital Management, Cliff Asness's AQR Capital Management and Jim Simons's Renaissance Technologies.
Since Altria Group Inc (NYSE:MO) has experienced a declination in interest from hedge fund managers, it's safe to say that there lies a certain "tier" of hedgies who sold off their full holdings heading into 2013. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the biggest investment of the "upper crust" of funds we key on, totaling close to $61 million in stock.. Louis Navellier's fund, Navellier & Associates, also dropped its stock, about $42 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 7 funds heading into 2013.
Insider buying is best served when the company we're looking at has experienced transactions within the past six months. Over the latest half-year time frame, Altria Group Inc (NYSE:MO) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
With the returns shown by our studies, retail investors must always watch hedge fund and insider trading activity, and Altria Group Inc (NYSE:MO) is no exception.
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.