Is Williams-Sonoma, Inc. (NYSE:WSM) a buy here? Prominent investors are getting less optimistic. The number of long hedge fund positions fell by 6 lately.
According to most stock holders, hedge funds are seen as slow, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation today, we at Insider Monkey look at the bigwigs of this club, close to 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total capital, and by tracking their best picks, we have formulated a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Equally as key, positive insider trading activity is a second way to parse down the world of equities. There are a variety of reasons for a bullish insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this method if shareholders know what to do (learn more here).
With these “truths” under our belt, it’s important to take a peek at the latest action surrounding Williams-Sonoma, Inc. (NYSE:WSM).
How are hedge funds trading Williams-Sonoma, Inc. (NYSE:WSM)?
In preparation for this year, a total of 22 of the hedge funds we track were long in this stock, a change of -21% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably.
Of the funds we track, Select Equity Group, managed by Robert Joseph Caruso, holds the biggest position in Williams-Sonoma, Inc. (NYSE:WSM). Select Equity Group has a $174 million position in the stock, comprising 2.7% of its 13F portfolio. Coming in second is Egerton Capital Limited, managed by John Armitage, which held a $137 million position; 0.3% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Ricky Sandler’s Eminence Capital and Robert Pohly’s Samlyn Capital.
Judging by the fact that Williams-Sonoma, Inc. (NYSE:WSM) has witnessed declining sentiment from the smart money, it’s safe to say that there is a sect of hedge funds that slashed their full holdings at the end of the year. Intriguingly, Daniel S. Och’s OZ Management cut the largest position of all the hedgies we monitor, comprising close to $59 million in stock.. Alexander Mitchell’s fund, Scopus Asset Management, also said goodbye to its stock, about $13 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds at the end of the year.
How are insiders trading Williams-Sonoma, Inc. (NYSE:WSM)?
Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the last six-month time period, Williams-Sonoma, Inc. (NYSE:WSM) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
With the results exhibited by our studies, everyday investors must always pay attention to hedge fund and insider trading activity, and Williams-Sonoma, Inc. (NYSE:WSM) applies perfectly to this mantra.
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