Endo Health Solutions Inc (NASDAQ:ENDP) investors should pay attention to a decrease in hedge fund sentiment lately.
In the eyes of most traders, hedge funds are perceived as worthless, old investment tools of years past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the crème de la crème of this club, close to 450 funds. It is widely believed that this group oversees most of the hedge fund industry's total capital, and by watching their best picks, we have figured out a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Just as integral, optimistic insider trading sentiment is a second way to break down the investments you're interested in. Obviously, there are plenty of motivations for an insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this strategy if piggybackers know where to look (learn more here).
With these "truths" under our belt, it's important to take a look at the recent action regarding Endo Health Solutions Inc (NASDAQ:ENDP).
Heading into 2013, a total of 22 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their holdings significantly.
Of the funds we track, Jacob Gottlieb's Visium Asset Management had the largest position in Endo Health Solutions Inc (NASDAQ:ENDP), worth close to $86 million, comprising 3% of its total 13F portfolio. Sitting at the No. 2 spot is Levin Capital Strategies, managed by John A. Levin, which held a $74 million position; 1.5% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Steven Cohen's SAC Capital Advisors, Jacob Gottlieb's Visium Asset Management and James E. Flynn's Deerfield Management.
Since Endo Health Solutions Inc (NASDAQ:ENDP) has witnessed declining sentiment from the entirety of the hedge funds we track, it's easy to see that there is a sect of funds that slashed their full holdings heading into 2013. It's worth mentioning that Lee Ainslie's Maverick Capital cut the largest position of the "upper crust" of funds we track, valued at about $161 million in stock.. Sean Cullinan's fund, Point State Capital, also sold off its stock, about $40 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider purchases made by high-level executives is best served when the company in question has experienced transactions within the past half-year. Over the latest 180-day time period, Endo Health Solutions Inc (NASDAQ:ENDP) has seen 2 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned time-tested strategies, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Endo Health Solutions Inc (NASDAQ:ENDP) applies perfectly to this mantra.
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