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National CineMedia, Inc. (NCMI): Hedge Funds and Insiders Are Bearish, What Should You Do?

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National CineMedia, Inc. (NASDAQ:NCMI) was in 14 hedge funds’ portfolio at the end of the first quarter of 2013. NCMI investors should pay attention to a decrease in enthusiasm from smart money of late. There were 15 hedge funds in our database with NCMI positions at the end of the previous quarter.

According to most shareholders, hedge funds are perceived as unimportant, old financial vehicles of the past. While there are over 8000 funds with their doors open at present, we at Insider Monkey hone in on the crème de la crème of this club, around 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total capital, and by monitoring their best equity investments, we have unearthed a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started 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 (check out a sample of our picks).

CITADEL INVESTMENT GROUPEqually as beneficial, optimistic insider trading sentiment is a second way to break down the financial markets. Obviously, there are a variety of incentives for a bullish insider to get rid of shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this method if you know where to look (learn more here).

With all of this in mind, let’s take a gander at the latest action regarding National CineMedia, Inc. (NASDAQ:NCMI).

What have hedge funds been doing with National CineMedia, Inc. (NASDAQ:NCMI)?

At Q1’s end, a total of 14 of the hedge funds we track held long positions in this stock, a change of -7% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully.

When looking at the hedgies we track, Wallace Weitz’s Wallace R. Weitz & Co. had the most valuable position in National CineMedia, Inc. (NASDAQ:NCMI), worth close to $31 million, comprising 1.3% of its total 13F portfolio. Sitting at the No. 2 spot is Dorsal Capital Management, managed by Ryan Frick and Oliver Evans, which held a $17.9 million position; 2.4% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Geoffrey Raynor’s Q Investments (Specter Holdings), Charles Clough’s Clough Capital Partners and Ken Griffin’s Citadel Investment Group.

Since National CineMedia, Inc. (NASDAQ:NCMI) has experienced bearish sentiment from the smart money, it’s easy to see that there exists a select few funds that elected to cut their entire stakes heading into Q2. It’s worth mentioning that John Fichthorn’s Dialectic Capital Management dumped the biggest investment of the “upper crust” of funds we track, valued at about $1.5 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also said goodbye to its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q2.

What do corporate executives and insiders think about National CineMedia, Inc. (NASDAQ:NCMI)?

Insider buying is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the latest 180-day time period, National CineMedia, Inc. (NASDAQ:NCMI) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to National CineMedia, Inc. (NASDAQ:NCMI). These stocks are Harte-Hanks, Inc. (NYSE:HHS), Millennial Media, Inc. (NYSE:MM), MDC Partners Inc. (USA) (NASDAQ:MDCA), Arbitron Inc. (NYSE:ARB), and Valassis Communications, Inc. (NYSE:VCI). This group of stocks are the members of the marketing services industry and their market caps resemble NCMI’s market cap.

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