Is Knight Capital Group Inc. (NYSE:KCG) going to take off soon? Investors who are in the know are becoming less confident. The number of long hedge fund positions shrunk by 2 lately.
To the average investor, there are plenty of indicators market participants can use to analyze Mr. Market. Two of the most useful are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the S&P 500 by a significant margin (see just how much).
Just as beneficial, bullish insider trading activity is another way to break down the world of equities. As the old adage goes: there are a variety of motivations for an upper level exec to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this tactic if investors understand what to do (learn more here).
Keeping this in mind, let’s take a peek at the latest action surrounding Knight Capital Group Inc. (NYSE:KCG).
What does the smart money think about Knight Capital Group Inc. (NYSE:KCG)?
At Q1’s end, a total of 14 of the hedge funds we track were bullish in this stock, a change of -13% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies we track, Brian Taylor’s Pine River Capital Management had the most valuable position in Knight Capital Group Inc. (NYSE:KCG), worth close to $36.5 million, comprising 0.7% of its total 13F portfolio. On Pine River Capital Management’s heels is Alpine Associates, managed by Robert Emil Zoellner, which held a $21.1 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Steven Cohen’s SAC Capital Advisors, Philippe Jabre’s Jabre Capital Partners and Malcolm Fairbairn’s Ascend Capital.
Judging by the fact that Knight Capital Group Inc. (NYSE:KCG) has witnessed declining sentiment from the smart money, logic holds that there was a specific group of money managers who sold off their entire stakes heading into Q2. Intriguingly, John Arnold’s Centaurus Advisors dropped the largest investment of the 450+ funds we monitor, comprising about $4.9 million in stock.. Matthew Halbower’s fund, Pentwater Capital Management, also dropped its stock, about $3.5 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds heading into Q2.
How have insiders been trading Knight Capital Group Inc. (NYSE:KCG)?
Insider buying is at its handiest when the company in focus has experienced transactions within the past six months. Over the last 180-day time period, Knight Capital Group Inc. (NYSE:KCG) has seen zero unique insiders purchasing, and 1 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 Knight Capital Group Inc. (NYSE:KCG). These stocks are Greenhill & Co., Inc. (NYSE:GHL), Palmetto Bancshares Inc (NASDAQ:PLMT), SWS Group, Inc. (NYSE:SWS), Oppenheimer Holdings Inc. (USA) (NYSE:OPY), and Investment Technology Group (NYSE:ITG). This group of stocks are the members of the investment brokerage – regional industry and their market caps resemble KCG’s market cap.