Is hhgregg, Inc. (NYSE:HGG) a sound investment today? Money managers are turning bullish. The number of long hedge fund bets rose by 2 lately.
To most market participants, hedge funds are seen as worthless, old financial tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the aristocrats of this club, about 450 funds. It is widely believed that this group controls the majority of the hedge fund industry's total asset base, and by keeping an eye on their top investments, we have discovered a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed 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 outperformed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as beneficial, positive insider trading activity is another way to parse down the world of equities. Just as you'd expect, there are a variety of reasons for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this strategy if shareholders understand where to look (learn more here).
Consequently, we're going to take a peek at the recent action encompassing hhgregg, Inc. (NYSE:HGG).
Heading into 2013, a total of 10 of the hedge funds we track held long positions in this stock, a change of 25% from one quarter earlier. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully.
According to our comprehensive database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in hhgregg, Inc. (NYSE:HGG). Adage Capital Management has a $14.9 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which held a $8.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Cliff Asness's AQR Capital Management, Ryan Heslop and Ariel Warszawski's Firefly Value Partners and Joel Greenblatt's Gotham Asset Management.
Consequently, key hedge funds have jumped into hhgregg, Inc. (NYSE:HGG) headfirst. Gotham Asset Management, managed by Joel Greenblatt, created the biggest position in hhgregg, Inc. (NYSE:HGG). Gotham Asset Management had 2 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new HGG investors: John Overdeck and David Siegel's Two Sigma Advisors and Neil Chriss's Hutchin Hill Capital.
Insider purchases made by high-level executives is at its handiest when the company we're looking at has seen transactions within the past half-year. Over the last six-month time frame, hhgregg, Inc. (NYSE:HGG) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to hhgregg, Inc. (NYSE:HGG). These stocks are Best Buy Co., Inc. (NYSE:BBY), GameStop Corp. (NYSE:GME), CONN'S, Inc. (NASDAQ:CONN), , and RadioShack Corporation (NYSE:RSH). This group of stocks belong to the electronics stores industry and their market caps resemble HGG's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Best Buy Co., Inc. (NYSE:BBY)||29||0||0|
|GameStop Corp. (NYSE:GME)||21||0||1|
|CONN'S, Inc. (NASDAQ:CONN)||14||0||11|
|RadioShack Corporation (NYSE:RSH)||14||1||0|
With the results exhibited by Insider Monkey's research, everyday investors should always pay attention to hedge fund and insider trading sentiment, and hhgregg, Inc. (NYSE:HGG) applies perfectly to this mantra.