Hedge Funds Aren’t Crazy About Plum Creek Timber Co. Inc. (PCL) Anymore: Senior Housing Properties Trust (SNH), American Capital Agency Corp. (AGNC)

Plum Creek Timber Co. Inc. (NYSE:PCL) was in 13 hedge funds’ portfolio at the end of December. PCL has seen a decrease in activity from the world’s largest hedge funds of late. There were 13 hedge funds in our database with PCL positions at the end of the previous quarter.

High Yielding Commodities: Beyond EnergyTo most investors, hedge funds are perceived as worthless, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open today, we at Insider Monkey hone in on the crème de la crème of this group, around 450 funds. It is estimated that this group has its hands on the majority of the smart money’s total capital, and by tracking their top investments, we have figured out a number of investment strategies that have historically outstripped 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 started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Just as beneficial, bullish insider trading activity is a second way to parse down the investments you’re interested in. There are many reasons for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this tactic if piggybackers know where to look (learn more here).

With all of this in mind, let’s take a look at the latest action encompassing Plum Creek Timber Co. Inc. (NYSE:PCL).

Hedge fund activity in Plum Creek Timber Co. Inc. (NYSE:PCL)

At the end of the fourth quarter, a total of 13 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.

When looking at the hedgies we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the most valuable position in Plum Creek Timber Co. Inc. (NYSE:PCL). First Eagle Investment Management has a $351 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Tom Gayner of Markel Gayner Asset Management, with a $16 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Richard Driehaus’s Driehaus Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and John Zaro’s Bourgeon Capital.

Because Plum Creek Timber Co. Inc. (NYSE:PCL) has witnessed a declination in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds who sold off their full holdings last quarter. Interestingly, Steven Cohen’s SAC Capital Advisors dropped the biggest stake of the “upper crust” of funds we track, comprising about $4 million in call options, and Peter J. Eichler Jr. of Aletheia Research and Management was right behind this move, as the fund dropped about $2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading Plum Creek Timber Co. Inc. (NYSE:PCL)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has seen transactions within the past 180 days. Over the last 180-day time period, Plum Creek Timber Co. Inc. (NYSE:PCL) has seen zero unique insiders purchasing, and 14 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 Plum Creek Timber Co. Inc. (NYSE:PCL). These stocks are Senior Housing Properties Trust (NYSE:SNH), American Capital Agency Corp. (NASDAQ:AGNC), Essex Property Trust Inc (NYSE:ESS), Camden Property Trust (NYSE:CPT), and UDR, Inc. (NYSE:UDR). This group of stocks are the members of the reit – residential industry and their market caps are closest to PCL’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Senior Housing Properties Trust (NYSE:SNH) 8 0 0
American Capital Agency Corp. (NASDAQ:AGNC) 23 2 1
Essex Property Trust Inc (NYSE:ESS) 11 0 1
Camden Property Trust (NYSE:CPT) 10 0 12
UDR, Inc. (NYSE:UDR) 9 0 2

With the results exhibited by the aforementioned tactics, retail investors should always keep an eye on hedge fund and insider trading activity, and Plum Creek Timber Co. Inc. (NYSE:PCL) applies perfectly to this mantra.

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

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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