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People’s United Financial, Inc. (NASDAQ:PBCT): Insiders Are Dumping, Should You? – Investors Bancorp, Inc. (NASDAQ:ISBC), Ocwen Financial Corporation (NYSE:OCN)

People’s United Financial, Inc. (NASDAQ:PBCT) was in 14 hedge funds’ portfolio at the end of December. PBCT investors should be aware of an increase in support from the world’s most elite money managers in recent months. There were 12 hedge funds in our database with PBCT holdings at the end of the previous quarter.

According to most market participants, hedge funds are seen as worthless, outdated financial tools of the past. While there are over 8000 funds trading today, we at Insider Monkey choose to focus on the elite of this club, about 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by watching their best investments, we have identified a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Equally as beneficial, optimistic insider trading sentiment is a second way to parse down the stock market universe. Obviously, there are many reasons for an upper level exec to sell shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this method if piggybackers know what to do (learn more here).

Keeping this in mind, it’s important to take a peek at the latest action surrounding People’s United Financial, Inc. (NASDAQ:PBCT).

What have hedge funds been doing with People’s United Financial, Inc. (NASDAQ:PBCT)?

At year’s end, a total of 14 of the hedge funds we track were long in this stock, a change of 17% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably.

Of the funds we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in People’s United Financial, Inc. (NASDAQ:PBCT). Arrowstreet Capital has a $10 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Michael Price of MFP Investors, with a $4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Israel Englander’s Millennium Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’s AQR Capital Management.

As industrywide interest jumped, some big names have jumped into People’s United Financial, Inc. (NASDAQ:PBCT) headfirst. MFP Investors, managed by Michael Price, created the largest position in People’s United Financial, Inc. (NASDAQ:PBCT). MFP Investors had 4 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $1 million position during the quarter. The only other fund with a brand new PBCT position is Steven Cohen’s SAC Capital Advisors.

How have insiders been trading People’s United Financial, Inc. (NASDAQ:PBCT)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time period, People’s United Financial, Inc. (NASDAQ:PBCT) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to People’s United Financial, Inc. (NASDAQ:PBCT). These stocks are Investors Bancorp, Inc. (NASDAQ:ISBC), First Niagara Financial Group Inc. (NASDAQ:FNFG), New York Community Bancorp, Inc. (NYSE:NYCB), Ocwen Financial Corporation (NYSE:OCN), and Hudson City Bancorp, Inc. (NASDAQ:HCBK). This group of stocks belong to the savings & loans industry and their market caps match PBCT’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Investors Bancorp, Inc. (NASDAQ:ISBC) 7 1 1
First Niagara Financial Group Inc. (NASDAQ:FNFG) 16 3 0
New York Community Bancorp, Inc. (NYSE:NYCB) 0 0
Ocwen Financial Corporation (NYSE:OCN) 34 0 4
Hudson City Bancorp, Inc. (NASDAQ:HCBK) 22 0 0

With the returns demonstrated by Insider Monkey’s strategies, retail investors should always keep an eye on hedge fund and insider trading sentiment, and People’s United Financial, Inc. (NASDAQ:PBCT) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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