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Hedge Funds Aren’t Crazy About Morgan Stanley (NYSE:MS) Anymore

Morgan Stanley (NYSE:MS) was in 49 hedge funds’ portfolio at the end of December. MS has experienced a decrease in activity from the world’s largest hedge funds in recent months. There were 52 hedge funds in our database with MS positions at the end of the previous quarter.

In the 21st century investor’s toolkit, there are many methods investors can use to monitor publicly traded companies. A pair of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best money managers can trounce the market by a superb amount (see just how much).

Equally as integral, optimistic insider trading sentiment is a second way to parse down the marketplace. Obviously, there are lots of reasons for an executive to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).

Keeping this in mind, it’s important to take a peek at the recent action regarding Morgan Stanley (NYSE:MS).

What have hedge funds been doing with Morgan Stanley (NYSE:MS)?

In preparation for this year, a total of 49 of the hedge funds we track were bullish 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 noteworthy hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Boykin Curry’s Eagle Capital Management had the largest position in Morgan Stanley (NYSE:MS), worth close to $532 million billion, accounting for 3.8% of its total 13F portfolio. On Eagle Capital Management’s heels is Ken Griffin of Citadel Investment Group, with a $288 million position; 2.7% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Ken Heebner’s Capital Growth Management, Richard S. Pzena’s Pzena Investment Management and Dan Loeb’s Third Point.

Seeing as Morgan Stanley (NYSE:MS) has experienced bearish sentiment from the smart money, it’s easy to see that there were a few fund managers that decided to sell off their full holdings at the end of the year. It’s worth mentioning that Jonathon Jacobson’s Highfields Capital Management dumped the biggest stake of the “upper crust” of funds we watch, totaling about $84 million in stock.. Richard Perry’s fund, Perry Capital, also sold off its stock, about $75 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds at the end of the year.

How are insiders trading Morgan Stanley (NYSE:MS)?

Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the last 180-day time period, Morgan Stanley (NYSE:MS) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

With the returns demonstrated by our research, everyday investors should always pay attention to hedge fund and insider trading activity, and Morgan Stanley (NYSE:MS) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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.

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