Is BHP Billiton Limited (ADR) (NYSE:BHP) a buy, sell, or hold? Hedge funds are becoming hopeful. The number of bullish hedge fund positions advanced by 2 in recent months.
According to most investors, hedge funds are perceived as worthless, old financial tools of years past. While there are greater than 8000 funds in operation today, we hone in on the bigwigs of this club, around 450 funds. It is widely believed that this group has its hands on the lion's share of the smart money's total capital, and by watching their top picks, we have come up with a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as integral, positive insider trading activity is a second way to parse down the marketplace. There are plenty of reasons for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would buy. Many empirical studies have demonstrated the impressive potential of this strategy if investors understand what to do (learn more here).
With these "truths" under our belt, let's take a gander at the key action regarding BHP Billiton Limited (ADR) (NYSE:BHP).
At Q1's end, a total of 18 of the hedge funds we track were bullish in this stock, a change of 13% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.
According to our comprehensive database, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in BHP Billiton Limited (ADR) (NYSE:BHP). Fisher Asset Management has a $454.7 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Scout Capital Management, managed by James Crichton and Adam Weiss, which held a $29.1 million call position; 0.4% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include John Burbank's Passport Capital, and David Dreman's Dreman Value Management.
As one would reasonably expect, key money managers were breaking ground themselves. Scout Capital Management, managed by James Crichton and Adam Weiss, initiated the biggest call position in BHP Billiton Limited (ADR) (NYSE:BHP). Scout Capital Management had 29.1 million invested in the company at the end of the quarter. Bart Baum's Ionic Capital Management also initiated a $3.7 million position during the quarter. The other funds with new positions in the stock are Ray Dalio's Bridgewater Associates, Israel Englander's Millennium Management, and David Costen Haley's HBK Investments.
Insider purchases made by high-level executives is best served when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time period, BHP Billiton Limited (ADR) (NYSE:BHP) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to BHP Billiton Limited (ADR) (NYSE:BHP). These stocks are Cameco Corporation (USA) (NYSE:CCJ), Teck Resources Ltd (USA) (NYSE:TCK), Rio Tinto plc (ADR) (NYSE:RIO), Vale SA (ADR) (NYSE:VALE), and BHP Billiton plc (ADR) (NYSE:BBL). This group of stocks are the members of the industrial metals & minerals industry and their market caps are closest to BHP's market cap.