Covanta Holding Corporation (NYSE:CVA) investors should be aware of a decrease in support from the world's most elite money managers lately.
In today’s marketplace, there are dozens of gauges investors can use to track publicly traded companies. A duo of the best are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can trounce their index-focused peers by a solid amount (see just how much).
Just as integral, optimistic insider trading sentiment is another way to parse down the marketplace. As the old adage goes: there are many reasons for an executive to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this method if shareholders understand what to do (learn more here).
Now, let's take a glance at the recent action encompassing Covanta Holding Corporation (NYSE:CVA).
In preparation for this year, a total of 20 of the hedge funds we track were long in this stock, a change of -5% from the previous quarter. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies we track, Martin Whitman's Third Avenue Management had the largest position in Covanta Holding Corporation (NYSE:CVA), worth close to $145 million, accounting for 3.1% of its total 13F portfolio. On Third Avenue Management's heels is Iridian Asset Management, managed by David Cohen and Harold Levy, which held a $56 million position; 0% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include John A. Levin's Levin Capital Strategies, Eliav Assouline and Marc Andersen's Axial Capital and Jim Simons's Renaissance Technologies.
Seeing as Covanta Holding Corporation (NYSE:CVA) has faced declining sentiment from the smart money, logic holds that there were a few money managers who sold off their entire stakes heading into 2013. Interestingly, John Hurley's Cavalry Asset Management cut the largest stake of the 450+ funds we track, comprising about $4 million in stock.. Michael Hintze's fund, CQS Cayman LP, also dropped its stock, about $1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into 2013.
Insider buying is particularly usable when the company we're looking at has experienced transactions within the past half-year. Over the last 180-day time period, Covanta Holding Corporation (NYSE:CVA) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
With the results demonstrated by our strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Covanta Holding Corporation (NYSE:CVA) is no exception.
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