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ITT Educational Services, Inc. (ESI): A Crucial Metric To Watch

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Is ITT Educational Services, Inc. (NYSE:ESI) an attractive stock to buy now? Prominent investors are in a bullish mood. The number of long hedge fund bets advanced by 1 lately.

ITT Educational Services, Inc. (NYSE:ESI)

If you’d ask most investors, hedge funds are seen as unimportant, old financial vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, we at Insider Monkey look at the upper echelon of this club, about 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total asset base, and by tracking their best picks, we have uncovered a number of 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 per annum 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 24 percentage points in 7 months (explore the details and some picks here).

Equally as beneficial, positive insider trading activity is a second way to parse down the financial markets. As the old adage goes: there are many incentives for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this tactic if “monkeys” know where to look (learn more here).

With all of this in mind, it’s important to take a peek at the recent action surrounding ITT Educational Services, Inc. (NYSE:ESI).

Hedge fund activity in ITT Educational Services, Inc. (NYSE:ESI)

At year’s end, a total of 18 of the hedge funds we track held long positions in this stock, a change of 6% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially.

When looking at the hedgies we track, Select Equity Group, managed by Robert Joseph Caruso, holds the most valuable position in ITT Educational Services, Inc. (NYSE:ESI). Select Equity Group has a $66 million position in the stock, comprising 1% of its 13F portfolio. Coming in second is Richard Blum of Blum Capital Partners, with a $57.8 million position; 9.3% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Cliff Asness’s AQR Capital Management, and Robert Pitts’s Steadfast Capital Management.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Axial Capital, managed by Eliav Assouline and Marc Andersen, created the largest position in ITT Educational Services, Inc. (NYSE:ESI). Axial Capital had 2 million invested in the company at the end of the quarter. Himanshu H. Shah’s Shah Capital Management also initiated a $1.9 million position during the quarter. The other funds with brand new ESI positions are Mike Vranos’s Ellington and Charles Davidson’s Wexford Capital.

How have insiders been trading ITT Educational Services, Inc. (NYSE:ESI)?

Insider buying is at its handiest when the company in question has seen transactions within the past half-year. Over the last half-year time period, ITT Educational Services, Inc. (NYSE:ESI) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to ITT Educational Services, Inc. (NYSE:ESI). These stocks are Education Management Corp (NASDAQ:EDMC), GP Strategies Corporation (NYSE:GPX), Franklin Covey Co. (NYSE:FC), Capella Education Company (NASDAQ:CPLA), and Universal Technical Institute, Inc. (NYSE:UTI). This group of stocks are the members of the education & training services industry and their market caps are similar to ESI’s market cap.

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