OfficeMax Inc (NYSE:OMX) investors should pay attention to a decrease in hedge fund sentiment lately.
In the eyes of most traders, hedge funds are viewed as worthless, outdated investment tools of years past. While there are greater than 8000 funds in operation at present, we hone in on the leaders of this club, about 450 funds. It is estimated that this group controls the majority of all hedge funds' total asset base, and by monitoring their highest performing stock picks, we have unearthed a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as beneficial, optimistic insider trading sentiment is another way to break down the investments you're interested in. As the old adage goes: there are many motivations for an insider to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if you understand what to do (learn more here).
Now, let's take a look at the key action encompassing OfficeMax Inc (NYSE:OMX).
In preparation for this quarter, a total of 17 of the hedge funds we track were bullish in this stock, a change of -15% from the previous quarter. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their stakes substantially.
According to our comprehensive database, Alpine Associates, managed by Robert Emil Zoellner, holds the biggest position in OfficeMax Inc (NYSE:OMX). Alpine Associates has a $42.2 million position in the stock, comprising 1.6% of its 13F portfolio. Coming in second is CR Intrinsic Investors, managed by SAC Subsidiary, which held a $19.7 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Thomas Steyer's Farallon Capital, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Carl Tiedemann and Michael Tiedemann's TIG Advisors.
Because OfficeMax Inc (NYSE:OMX) has faced bearish sentiment from the smart money, we can see that there is a sect of fund managers who sold off their entire stakes heading into Q2. Interestingly, Phill Gross and Robert Atchinson's Adage Capital Management sold off the biggest position of the "upper crust" of funds we key on, comprising close to $9.8 million in stock., and Ken Griffin of Citadel Investment Group was right behind this move, as the fund cut about $9 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q2.
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time frame, OfficeMax Inc (NYSE:OMX) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to OfficeMax Inc (NYSE:OMX). These stocks are Francesca's Holdings Corp (NASDAQ:FRAN), EZCORP Inc (NASDAQ:EZPW), Office Depot Inc (NYSE:ODP), Barnes & Noble, Inc. (NYSE:BKS), and Finish Line Inc (NASDAQ:FINL). This group of stocks belong to the specialty retail, other industry and their market caps resemble OMX's market cap.