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Is Vector Group Ltd (VGR) Going to Burn These Hedge Funds?

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Vector Group Ltd (NYSE:VGR) was in 8 hedge funds’ portfolio at the end of the first quarter of 2013. VGR has experienced a decrease in hedge fund sentiment in recent months. There were 11 hedge funds in our database with VGR holdings at the end of the previous quarter.

If you’d ask most traders, hedge funds are assumed to be underperforming, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at the moment, we hone in on the elite of this club, around 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total capital, and by keeping an eye on their top picks, we have come up with a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a 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 topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as integral, bullish insider trading sentiment is a second way to parse down the stock market universe. Obviously, there are plenty of motivations for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this tactic if “monkeys” know what to do (learn more here).

Keeping this in mind, it’s important to take a gander at the recent action regarding Vector Group Ltd (NYSE:VGR).

Hedge fund activity in Vector Group Ltd (NYSE:VGR)

At Q1’s end, a total of 8 of the hedge funds we track held long positions in this stock, a change of -27% from the first quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably.

Vector Group Ltd (NYSE:VGR)Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Vector Group Ltd (NYSE:VGR). Renaissance Technologies has a $67.1 million position in the stock, comprising 0.2% of its 13F portfolio. On Renaissance Technologies’s heels is Ken Griffin of Citadel Investment Group, with a $9.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Joel Greenblatt’s Gotham Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and Israel Englander’s Millennium Management.

Judging by the fact that Vector Group Ltd (NYSE:VGR) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of money managers who sold off their full holdings at the end of the first quarter. It’s worth mentioning that Michael A. Price and Amos Meron’s Empyrean Capital Partners said goodbye to the largest investment of the 450+ funds we watch, comprising close to $5.4 million in stock., and Glenn Russell Dubin of Highbridge Capital Management was right behind this move, as the fund cut about $2.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds at the end of the first quarter.

What have insiders been doing with Vector Group Ltd (NYSE:VGR)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest 180-day time frame, Vector Group Ltd (NYSE:VGR) has experienced 1 unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Vector Group Ltd (NYSE:VGR). These stocks are Philip Morris International Inc. (NYSE:PM), British American Tobacco PLC (ADR) (NYSEAMEX:BTI), Altria Group Inc (NYSE:MO), Reynolds American, Inc. (NYSE:RAI), and Lorillard Inc. (NYSE:LO). All of these stocks are in the cigarettes industry and their market caps are similar to VGR’s market cap.

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