Is Sasol Limited (ADR) (NYSE:SSL) the right investment to pursue these days? The best stock pickers are taking a pessimistic view. The number of long hedge fund positions dropped by 2 lately.
To most market participants, hedge funds are perceived as slow, outdated financial tools of the past. While there are greater than 8000 funds in operation today, we hone in on the elite of this club, close to 450 funds. It is widely believed that this group oversees most of the smart money's total capital, and by keeping an eye on their best equity investments, we have formulated a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as beneficial, positive insider trading sentiment is a second way to break down the marketplace. Obviously, there are lots of reasons for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this strategy if piggybackers understand what to do (learn more here).
Keeping this in mind, we're going to take a glance at the latest action encompassing Sasol Limited (ADR) (NYSE:SSL).
At Q1's end, a total of 6 of the hedge funds we track were long in this stock, a change of -25% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly.
When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Sasol Limited (ADR) (NYSE:SSL). Renaissance Technologies has a $2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $1.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Ken Griffin's Citadel Investment Group, Bruce Kovner's Caxton Associates LP and Matthew Hulsizer's PEAK6 Capital Management.
Due to the fact that Sasol Limited (ADR) (NYSE:SSL) has witnessed declining sentiment from hedge fund managers, it's safe to say that there was a specific group of money managers that elected to cut their full holdings heading into Q2. Interestingly, Israel Englander's Millennium Management dumped the largest investment of all the hedgies we key on, valued at close to $3.1 million in stock.. Matthew Tewksbury's fund, Stevens Capital Management, also dropped its stock, about $1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds heading into Q2.
Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last six-month time period, Sasol Limited (ADR) (NYSE:SSL) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to Sasol Limited (ADR) (NYSE:SSL). These stocks are Eni SpA (ADR) (NYSE:E), Statoil ASA (ADR) (NYSE:STO), ConocoPhillips (NYSE:COP), Occidental Petroleum Corporation (NYSE:OXY), and EnCana Corporation (USA) (NYSE:ECA). All of these stocks are in the major integrated oil & gas industry and their market caps are similar to SSL's market cap.