Is Motorola Solutions Inc (NYSE:MSI) the right pick for your portfolio? The smart money is getting less bullish. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
If you'd ask most stock holders, hedge funds are perceived as unimportant, outdated financial tools of the past. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the aristocrats of this group, about 450 funds. Most estimates calculate that this group controls most of the smart money's total asset base, and by monitoring their highest performing investments, we have revealed a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 25 percentage points in 6.5 month (see all of our picks from August).
Just as important, positive insider trading activity is another way to parse down the marketplace. Just as you'd expect, there are many motivations for an insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this tactic if shareholders understand what to do (learn more here).
Now, we're going to take a gander at the recent action encompassing Motorola Solutions Inc (NYSE:MSI).
Heading into 2013, a total of 35 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially.
According to our comprehensive database, ValueAct Capital, managed by Jeffrey Ubben, holds the largest position in Motorola Solutions Inc (NYSE:MSI). ValueAct Capital has a $1.61 billion position in the stock, comprising 20.5% of its 13F portfolio. Sitting at the No. 2 spot is Iridian Asset Management, managed by David Cohen and Harold Levy, which held a $242 million position; the fund has 4% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Jeffrey Tannenbaum's Fir Tree, William B. Gray's Orbis Investment Management and George Soros's Soros Fund Management.
Due to the fact that Motorola Solutions Inc (NYSE:MSI) has witnessed a declination in interest from the aggregate hedge fund industry, it's safe to say that there were a few money managers who sold off their positions entirely in Q4. At the top of the heap, Barry Rosenstein's JANA Partners dumped the biggest stake of the "upper crust" of funds we track, valued at about $81 million in stock., and Malcolm Fairbairn of Ascend Capital was right behind this move, as the fund said goodbye to about $12 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity, especially when it's bullish, is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time period, Motorola Solutions Inc (NYSE:MSI) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
With the results exhibited by the aforementioned time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Motorola Solutions Inc (NYSE:MSI) is no exception.
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