Embraer SA (ADR) (NYSE:ERJ) was in 8 hedge funds’ portfolio at the end of the fourth quarter of 2012. ERJ investors should be aware of a decrease in hedge fund interest recently. There were 11 hedge funds in our database with ERJ holdings at the end of the previous quarter.
In the 21st century investor’s toolkit, there are tons of methods investors can use to track the equity markets. Some of the best are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can beat their index-focused peers by a healthy amount (see just how much).
Just as beneficial, bullish insider trading activity is another way to break down the financial markets. Just as you’d expect, there are many stimuli for an insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the valuable potential of this tactic if you know what to do (learn more here).
With these “truths” under our belt, it’s important to take a gander at the key action surrounding Embraer SA (ADR) (NYSE:ERJ).
What does the smart money think about Embraer SA (ADR) (NYSE:ERJ)?
At year’s end, a total of 8 of the hedge funds we track were bullish in this stock, a change of -27% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.
Of the funds we track, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Embraer SA (ADR) (NYSE:ERJ). Fisher Asset Management has a $31.5 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Rob Citrone of Discovery Capital Management, with a $15.9 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Jim Simons’s Renaissance Technologies, David Costen Haley’s HBK Investments and Cliff Asness’s AQR Capital Management.
Judging by the fact that Embraer SA (ADR) (NYSE:ERJ) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few hedgies that elected to cut their entire stakes at the end of the year. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest investment of all the hedgies we monitor, worth close to $10.3 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund dumped about $4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds at the end of the year.
What do corporate executives and insiders think about Embraer SA (ADR) (NYSE:ERJ)?
Insider purchases made by high-level executives is at its handiest when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time frame, Embraer SA (ADR) (NYSE:ERJ) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Embraer SA (ADR) (NYSE:ERJ). These stocks are Triumph Group Inc (NYSE:TGI), Rockwell Collins, Inc. (NYSE:COL), TransDigm Group Incorporated (NYSE:TDG), L-3 Communications Holdings, Inc. (NYSE:LLL), and B/E Aerospace Inc (NASDAQ:BEAV). This group of stocks are the members of the aerospace/defense products & services industry and their market caps are closest to ERJ’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Triumph Group Inc (NYSE:TGI) | 23 | 2 | 3 |
| Rockwell Collins, Inc. (NYSE:COL) | 16 | 0 | 11 |
| TransDigm Group Incorporated (NYSE:TDG) | 31 | 1 | 7 |
| L-3 Communications Holdings, Inc. (NYSE:LLL) | 14 | 0 | 9 |
| B/E Aerospace Inc (NASDAQ:BEAV) | 28 | 0 | 9 |
With the returns demonstrated by Insider Monkey’s studies, everyday investors should always monitor hedge fund and insider trading sentiment, and Embraer SA (ADR) (NYSE:ERJ) is an important part of this process.
