Is it smart to be bullish on Office Depot Inc (NYSE:ODP)?
In today’s marketplace, there are many gauges investors can use to track publicly traded companies. Some of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can trounce the broader indices by a healthy amount (see just how much).
Equally as crucial, bullish insider trading activity is another way to look at the financial markets. As the old adage goes: there are plenty of incentives for an insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the market-beating potential of this method if you know where to look (learn more here).
Thus, it's important to study the recent info for Office Depot Inc (NYSE:ODP).
In preparation for the third quarter, a total of 27 of the hedge funds we track were bullish in this stock, a change of -4% from the first quarter. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their stakes substantially.
When using filings from the hedgies we track, Jeffrey Smith's Starboard Value LP had the most valuable position in Office Depot Inc (NYSE:ODP), worth close to $162.9 million, comprising 11.4% of its total 13F portfolio. On Starboard Value LP's heels is TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, which held a $51.7 million position; 7.4% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include D. E. Shaw's D E Shaw, Barry Rosenstein's JANA Partners and David Costen Haley's HBK Investments.
Because Office Depot Inc (NYSE:ODP) has witnessed declining interest from the smart money's best and brightest, it's safe to say that there is a sect of hedgies that elected to cut their full holdings at the end of the second quarter. Intriguingly, Brian Taylor's Pine River Capital Management said goodbye to the largest investment of the 450+ funds we monitor, comprising close to $8 million in stock. John Arnold's fund, Centaurus Advisors, also sold off its stock, about $3.2 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds at the end of the second quarter.
Legal insider trading, particularly when it's bullish, is most useful when the company we're looking at has experienced transactions within the past six months. Over the latest six-month time period, Office Depot Inc (NYSE:ODP) has seen zero unique insiders purchasing, and zero 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 Office Depot Inc (NYSE:ODP). These stocks are Barnes & Noble, Inc. (NYSE:BKS), Finish Line Inc (NASDAQ:FINL), Francesca's Holdings Corp (NASDAQ:FRAN), OfficeMax Inc (NYSE:OMX), and EZCORP Inc (NASDAQ:EZPW). This group of stocks are the members of the specialty retail, other industry and their market caps are closest to ODP's market cap.