Valassis Communications, Inc. (NYSE:VCI) investors should be aware of a decrease in enthusiasm from smart money of late.
If you’d ask most stock holders, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are more than 8000 funds trading at the moment, we choose to focus on the elite of this club, about 450 funds. Most estimates calculate that this group controls the lion’s share of the hedge fund industry’s total asset base, and by tracking their highest performing equity investments, we have spotted a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as key, positive insider trading sentiment is another way to parse down the financial markets. As the old adage goes: there are plenty of incentives for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know where to look (learn more here).
Keeping this in mind, it’s important to take a look at the recent action regarding Valassis Communications, Inc. (NYSE:VCI).
How have hedgies been trading Valassis Communications, Inc. (NYSE:VCI)?
At Q1’s end, a total of 15 of the hedge funds we track held long positions in this stock, a change of -25% from the first quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially.
When looking at the hedgies we track, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in Valassis Communications, Inc. (NYSE:VCI). Pzena Investment Management has a $50.4 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Royal Capital, managed by Yale M. Fergang and Robert W. Medway, which held a $36.9 million position; the fund has 9% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Josh Resnick’s Jericho Capital Asset Management, Ken Griffin’s Citadel Investment Group and John C. Walker’s Stonerise Capital Management.
Judging by the fact that Valassis Communications, Inc. (NYSE:VCI) has experienced bearish sentiment from hedge fund managers, we can see that there were a few hedgies that decided to sell off their full holdings in Q1. Intriguingly, Charles de Vaulx’s International Value Advisers cut the largest investment of the “upper crust” of funds we monitor, comprising close to $12.5 million in stock., and Pasco Alfaro / Richard Tumure of Miura Global Management was right behind this move, as the fund dropped about $4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds in Q1.
Insider trading activity in Valassis Communications, Inc. (NYSE:VCI)
Insider purchases made by high-level executives is best served when the company we’re looking at has seen transactions within the past half-year. Over the latest half-year time period, Valassis Communications, Inc. (NYSE:VCI) has experienced zero unique insiders buying, and 7 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Valassis Communications, Inc. (NYSE:VCI). These stocks are Millennial Media, Inc. (NYSE:MM), MDC Partners Inc. (USA) (NASDAQ:MDCA), Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), National CineMedia, Inc. (NASDAQ:NCMI), and Arbitron Inc. (NYSE:ARB). This group of stocks are in the marketing services industry and their market caps are similar to VCI’s market cap.