Is O'Reilly Automotive Inc (NASDAQ:ORLY) a buy here? The best stock pickers are turning less bullish. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience
According to most stock holders, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are over 8000 funds in operation today, we look at the upper echelon of this club, close to 450 funds. It is estimated that this group oversees most of the hedge fund industry's total capital, and by monitoring their top stock picks, we have unearthed a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Just as beneficial, bullish insider trading sentiment is a second way to parse down the world of equities. Obviously, there are plenty of reasons for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).
Consequently, it's important to take a gander at the key action surrounding O'Reilly Automotive Inc (NASDAQ:ORLY).
In preparation for this year, a total of 22 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly.
According to our comprehensive database, Stephen Mandel's Lone Pine Capital had the biggest position in O'Reilly Automotive Inc (NASDAQ:ORLY), worth close to $194 million, comprising 1.2% of its total 13F portfolio. On Lone Pine Capital's heels is Ken Griffin of Citadel Investment Group, with a $190 million position; 4.2% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Robert Joseph Caruso's Select Equity Group, and D. E. Shaw's D E Shaw.
Because O'Reilly Automotive Inc (NASDAQ:ORLY) has witnessed bearish sentiment from the smart money, it's easy to see that there were a few hedge funds who sold off their full holdings heading into 2013. Interestingly, Robert Rodriguez and Steven Romick's First Pacific Advisors LLC dumped the biggest stake of the "upper crust" of funds we track, comprising about $68 million in stock.. James Crichton and Adam Weiss's fund, Scout Capital Management, also said goodbye to its call options., about $25 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying is most useful when the company in question has experienced transactions within the past half-year. Over the latest 180-day time period, O'Reilly Automotive Inc (NASDAQ:ORLY) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
With the returns shown by Insider Monkey's studies, everyday investors should always watch hedge fund and insider trading activity, and O'Reilly Automotive Inc (NASDAQ:ORLY) 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.