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Should You Avoid Interactive Brokers Group, Inc. (NASDAQ:IBKR)? – Medley Capital Corp (NYSE:MCC), FXCM Inc (NYSE:FXCM)

Interactive Brokers Group, Inc. (NASDAQ:IBKR) has seen a decrease in enthusiasm from smart money of late.

Interactive Brokers Group, Inc. (NASDAQ:IBKR)

If you’d ask most traders, hedge funds are assumed to be unimportant, outdated investment vehicles of years past. While there are greater than 8000 funds trading at present, we look at the crème de la crème of this group, about 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total capital, and by watching their highest performing equity investments, we have formulated a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Just as important, optimistic insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are a number of incentives for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the impressive potential of this tactic if shareholders understand where to look (learn more here).

Keeping this in mind, we’re going to take a look at the key action surrounding Interactive Brokers Group, Inc. (NASDAQ:IBKR).

What does the smart money think about Interactive Brokers Group, Inc. (NASDAQ:IBKR)?

In preparation for this year, a total of 11 of the hedge funds we track were long in this stock, a change of -15% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Interactive Brokers Group, Inc. (NASDAQ:IBKR). Citadel Investment Group has a $20 million position in the stock, comprising 0% of its 13F portfolio. The second largest stake is held by Quincy Lee of Ancient Art (Teton Capital), with a $15 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include David Dreman’s Dreman Value Management, Chuck Royce’s Royce & Associates and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Judging by the fact that Interactive Brokers Group, Inc. (NASDAQ:IBKR) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that elected to cut their positions entirely in Q4. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management sold off the biggest position of all the hedgies we watch, worth close to $2 million in stock., and D. E. Shaw of D E Shaw was right behind this move, as the fund said goodbye to about $0 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in Q4.

What do corporate executives and insiders think about Interactive Brokers Group, Inc. (NASDAQ:IBKR)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time frame, Interactive Brokers Group, Inc. (NASDAQ:IBKR) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Interactive Brokers Group, Inc. (NASDAQ:IBKR). These stocks are GFI Group Inc. (NYSE:GFIG), Medley Capital Corp (NYSE:MCC), FXCM Inc (NYSE:FXCM), Piper Jaffray Companies (NYSE:PJC), and BGC Partners, Inc. (NASDAQ:BGCP). This group of stocks are the members of the investment brokerage – national industry and their market caps match IBKR’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
GFI Group Inc. (NYSE:GFIG) 4 0 2
Medley Capital Corp (NYSE:MCC) 11 1 0
FXCM Inc (NYSE:FXCM) 6 1 4
Piper Jaffray Companies (NYSE:PJC) 10 0 4
BGC Partners, Inc. (NASDAQ:BGCP) 8 0 0

With the results shown by our studies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Interactive Brokers Group, Inc. (NASDAQ:IBKR) is an important part of this process.

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