GlaxoSmithKline plc (ADR) (NYSE:GSK) shareholders have witnessed a decrease in hedge fund interest recently.
If you'd ask most market participants, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are over 8000 funds trading at present, we at Insider Monkey hone in on the leaders of this club, around 450 funds. Most estimates calculate that this group has its hands on the lion's share of the hedge fund industry's total capital, and by watching their top picks, we have revealed a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as important, positive insider trading activity is a second way to parse down the stock market universe. Obviously, there are plenty of stimuli for an executive to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this tactic if investors understand where to look (learn more here).
Keeping this in mind, we're going to take a gander at the key action regarding GlaxoSmithKline plc (ADR) (NYSE:GSK).
At the end of the fourth quarter, a total of 16 of the hedge funds we track held long positions in this stock, a change of -6% from the previous quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully.
When looking at the hedgies we track, Ken Fisher's Fisher Asset Management had the most valuable position in GlaxoSmithKline plc (ADR) (NYSE:GSK), worth close to $467 million, accounting for 1.3% of its total 13F portfolio. On Fisher Asset Management's heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $157 million position; 1.3% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Jim Simons's Renaissance Technologies, Bill Miller's Legg Mason Capital Management and Warren Buffett's Berkshire Hathaway.
Since GlaxoSmithKline plc (ADR) (NYSE:GSK) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that decided to sell off their full holdings at the end of the year. It's worth mentioning that Richard Driehaus's Driehaus Capital dropped the biggest investment of the "upper crust" of funds we watch, totaling about $5 million in stock.. Bart Baum's fund, Ionic Capital Management, also cut its call options., about $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 year.
Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last 180-day time period, GlaxoSmithKline plc (ADR) (NYSE:GSK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the results shown by our research, everyday investors must always watch hedge fund and insider trading activity, and GlaxoSmithKline plc (ADR) (NYSE:GSK) applies perfectly to this mantra.
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.