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Is Alliance Data Systems Corporation (ADS) Going to Burn These Hedge Funds?

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Is Alliance Data Systems Corporation (NYSE:ADS) a good investment?

At the moment, there are tons of methods investors can use to track their holdings. A pair of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a solid margin (see just how much).

Alliance Data Systems Corporation (NYSE:ADS)

Just as useful, optimistic insider trading sentiment is a second way to look at the stock market universe. Obviously, there are plenty of reasons for an insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the impressive potential of this tactic if shareholders understand what to do (learn more here).

What’s more, let’s examine the newest info surrounding Alliance Data Systems Corporation (NYSE:ADS).

How have hedgies been trading Alliance Data Systems Corporation (NYSE:ADS)?

In preparation for the third quarter, a total of 26 of the hedge funds we track held long positions in this stock, a change of 24% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably.

Out of the hedge funds we follow, Louis Navellier’s Navellier & Associates had the most valuable position in Alliance Data Systems Corporation (NYSE:ADS), worth close to $89.3 million, accounting for 2.7% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $62.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Israel Englander’s Millennium Management, James Dondero’s Highland Capital Management and Jim Simons’s Renaissance Technologies.

Now, certain bigger names were breaking ground themselves. Whitebox Advisors, managed by Andy Redleaf, initiated the largest position in Alliance Data Systems Corporation (NYSE:ADS). Whitebox Advisors had 221.5 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $114.2 million position during the quarter. The other funds with brand new ADS positions are Louis Navellier’s Navellier & Associates, John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co, and D. E. Shaw’s D E Shaw.

What have insiders been doing with Alliance Data Systems Corporation (NYSE:ADS)?

Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last six-month time frame, Alliance Data Systems Corporation (NYSE:ADS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Alliance Data Systems Corporation (NYSE:ADS). These stocks are Moody’s Corporation (NYSE:MCO), Fiserv, Inc. (NASDAQ:FISV), Fidelity National Information Services (NYSE:FIS), FleetCor Technologies, Inc. (NYSE:FLT), and Verisk Analytics, Inc. (NASDAQ:VRSK). This group of stocks are the members of the business services industry and their market caps are closest to ADS’s market cap.

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