Materials Select Sector SPDR (XLB): Watch This Metric

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Materials Select Sector SPDR (NYSEARCA:XLB) was in 10 hedge funds’ portfolio at the end of the fourth quarter of 2012. XLB investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 10 hedge funds in our database with XLB holdings at the end of the previous quarter.

Materials Select Sector SPDR (NYSEARCA:XLB)In today’s marketplace, there are dozens of gauges investors can use to track the equity markets. A duo of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top investment managers can beat the S&P 500 by a healthy margin (see just how much).

Equally as beneficial, bullish insider trading sentiment is another way to parse down the investments you’re interested in. There are a number of incentives for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).

With all of this in mind, we’re going to take a gander at the latest action surrounding Materials Select Sector SPDR (NYSEARCA:XLB).

Hedge fund activity in Materials Select Sector SPDR (NYSEARCA:XLB)

In preparation for this year, a total of 10 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Michael A. Price and Amos Meron’s Empyrean Capital Partners had the most valuable position in Materials Select Sector SPDR (NYSEARCA:XLB), worth close to $8.8 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Brevan Howard, managed by Alan Howard, which held a $5.2 million position; the fund has 9.5% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Michael Novogratz’s Fortress Investment Group and Brian Taylor’s Pine River Capital Management.

Due to the fact that Materials Select Sector SPDR (NYSEARCA:XLB) has experienced declining sentiment from the smart money, we can see that there is a sect of hedgies who sold off their positions entirely in Q4. At the top of the heap, Christian Leone’s Luxor Capital Group dropped the biggest position of the “upper crust” of funds we watch, totaling an estimated $36.8 million in call options, and Louis Navellier of Navellier & Associates was right behind this move, as the fund sold off about $31.3 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Materials Select Sector SPDR (NYSEARCA:XLB)

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the last 180-day time period, Materials Select Sector SPDR (NYSEARCA:XLB) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

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