rue21, inc. (NASDAQ:RUE) investors should be aware of a decrease in support from the world’s most elite money managers lately.
In the eyes of most shareholders, hedge funds are perceived as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds trading at the moment, we at Insider Monkey hone in on the upper echelon of this group, about 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by tracking their top investments, we have determined a few investment strategies that have historically outpaced the market. 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as important, optimistic insider trading sentiment is another way to parse down the investments you’re interested in. As the old adage goes: there are a variety of motivations for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if piggybackers know where to look (learn more here).
With these “truths” under our belt, it’s important to take a glance at the latest action encompassing rue21, inc. (NASDAQ:RUE).
How have hedgies been trading rue21, inc. (NASDAQ:RUE)?
At the end of the first quarter, a total of 5 of the hedge funds we track held long positions in this stock, a change of -17% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably.
When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in rue21, inc. (NASDAQ:RUE), worth close to $2.6 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Tudor Investment Corp, managed by Paul Tudor Jones, which held a $0.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Joel Greenblatt’s Gotham Asset Management, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.
Because rue21, inc. (NASDAQ:RUE) has experienced falling interest from the smart money, we can see that there was a specific group of hedgies who sold off their entire stakes at the end of the first quarter. It’s worth mentioning that Steven Cohen’s SAC Capital Advisors dumped the biggest investment of all the hedgies we monitor, valued at an estimated $7.1 million in stock.. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dropped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds at the end of the first quarter.
What do corporate executives and insiders think about rue21, inc. (NASDAQ:RUE)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has seen transactions within the past six months. Over the last six-month time period, rue21, inc. (NASDAQ:RUE) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to rue21, inc. (NASDAQ:RUE). These stocks are Children’s Place Retail Stores, Inc. (NASDAQ:PLCE), The Jones Group Inc. (NYSE:JNY), Hot Topic, Inc. (NASDAQ:HOTT), Stage Stores Inc (NYSE:SSI), and Cato Corp (NYSE:CATO). This group of stocks are the members of the apparel stores industry and their market caps match RUE’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Children’s Place Retail Stores, Inc. (NASDAQ:PLCE) | 19 | 0 | 5 |
| The Jones Group Inc. (NYSE:JNY) | 12 | 0 | 3 |
| Hot Topic, Inc. (NASDAQ:HOTT) | 18 | 0 | 2 |
| Stage Stores Inc (NYSE:SSI) | 18 | 0 | 6 |
| Cato Corp (NYSE:CATO) | 7 | 1 | 0 |
With the returns shown by Insider Monkey’s time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and rue21, inc. (NASDAQ:RUE) shareholders fit into this picture quite nicely.
