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H&R Block, Inc. (HRB): Insiders Aren’t Crazy About It But Hedge Funds Love It

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Is H&R Block, Inc. (NYSE:HRB) a buy?

In the eyes of many market players, hedge funds are assumed to be overrated, outdated investment vehicles of a forgotten age. Although there are more than 8,000 hedge funds in operation in present day, this site looks at the masters of this club, around 525 funds. It is widely held that this group has its hands on the lion’s share of the hedge fund industry’s total assets, and by watching their highest quality equity investments, we’ve unsheathed a few investment strategies that have historically outperformed the 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 started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as useful, bullish insider trading sentiment is a second way to analyze the marketplace. Just as you’d expect, there are a variety of stimuli for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this tactic if you understand where to look (learn more here).

What’s more, we’re going to discuss the latest info for H&R Block, Inc. (NYSE:HRB).

What have hedge funds been doing with H&R Block, Inc. (NYSE:HRB)?

Heading into Q3, a total of 37 of the hedge funds we track held long positions in this stock, a change of 9% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.

H&R Block, Inc. (NYSE:HRB)Out of the hedge funds we follow, Viking Global, managed by Andreas Halvorsen, holds the biggest position in H&R Block, Inc. (NYSE:HRB). Viking Global has a $610.4 million position in the stock, comprising 3.4% of its 13F portfolio. Sitting at the No. 2 spot is Lone Pine Capital, managed by Stephen Mandel, which held a $211.9 million position; 1% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include John Lykouretzos’s Hoplite Capital Management, Matt McLennan’s First Eagle Investment Management and David Goel and Paul Ferri’s Matrix Capital Management.

As industrywide interest increased, certain bigger names were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, assembled the most outsized position in H&R Block, Inc. (NYSE:HRB). Viking Global had 610.4 million invested in the company at the end of the quarter. Stephen Mandel’s Lone Pine Capital also initiated a $211.9 million position during the quarter. The following funds were also among the new HRB investors: John Lykouretzos’s Hoplite Capital Management, Matt McLennan’s First Eagle Investment Management, and David Goel and Paul Ferri’s Matrix Capital Management.

Insider trading activity in H&R Block, Inc. (NYSE:HRB)

Legal insider trading, particularly when it’s bullish, is most useful when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time frame, H&R Block, Inc. (NYSE:HRB) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to H&R Block, Inc. (NYSE:HRB). These stocks are VCA Antech Inc (NASDAQ:WOOF), Bright Horizons Family Solutions Inc (NYSE:BFAM), Weight Watchers International, Inc. (NYSE:WTW), Service Corporation International (NYSE:SCI), and Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA). This group of stocks are the members of the personal services industry and their market caps match HRB’s market cap.

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