Is E TRADE Financial Corporation (NASDAQ:ETFC) the right investment to pursue these days? The best stock pickers are selling. The number of long hedge fund positions went down by 2 in recent months.
In today’s marketplace, there are many methods market participants can use to track publicly traded companies. Some of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best investment managers can trounce the market by a healthy margin (see just how much).
Just as key, bullish insider trading sentiment is a second way to break down the world of equities. Obviously, there are a variety of incentives for an insider to drop shares of his or her company, but only one, very clear reason why they would buy. Many empirical studies have demonstrated the impressive potential of this tactic if "monkeys" understand where to look (learn more here).
Consequently, let's take a look at the latest action encompassing E TRADE Financial Corporation (NASDAQ:ETFC).
At the end of the fourth quarter, a total of 30 of the hedge funds we track were bullish in this stock, a change of -6% from the previous quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their stakes substantially.
When looking at the hedgies we track, Citadel Investment Group, managed by Ken Griffin, holds the largest position in E TRADE Financial Corporation (NASDAQ:ETFC). Citadel Investment Group has a $245 million position in the stock, comprising 0.4% of its 13F portfolio. On Citadel Investment Group's heels is Glenview Capital, managed by Larry Robbins, which held a $103 million position; 2.8% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include Leon Cooperman's Omega Advisors, Doug Silverman's Senator Investment Group and Clint Carlson's Carlson Capital.
Since E TRADE Financial Corporation (NASDAQ:ETFC) has witnessed falling interest from the smart money, we can see that there lies a certain "tier" of money managers that decided to sell off their full holdings at the end of the year. Interestingly, Dinakar Singh's TPG-AXON Management LP cut the largest position of all the hedgies we track, comprising an estimated $54 million in stock., and Michael Karsch of Karsch Capital Management was right behind this move, as the fund sold off about $13 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds at the end of the year.
Bullish insider trading is best served when the company we're looking at has experienced transactions within the past half-year. Over the latest six-month time frame, E TRADE Financial Corporation (NASDAQ:ETFC) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
With the returns exhibited by the aforementioned tactics, everyday investors must always watch hedge fund and insider trading sentiment, and E TRADE Financial Corporation (NASDAQ:ETFC) shareholders fit into this picture quite nicely.
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.