Is Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) the right investment to pursue these days? Hedge funds are becoming more confident. The number of long hedge fund bets went up by 1 recently.
If you'd ask most traders, hedge funds are assumed to be underperforming, outdated financial vehicles of the past. While there are more than 8000 funds with their doors open at the moment, we look at the upper echelon of this group, around 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money's total capital, and by keeping an eye on their top stock picks, we have uncovered a few investment strategies that have historically outstripped the market. 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 started 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 (explore the details and some picks here).
Equally as key, optimistic insider trading sentiment is a second way to break down the marketplace. There are a variety of incentives for an executive to drop shares of his or her company, but just one, very obvious reason why they would buy. Several academic studies have demonstrated the impressive potential of this strategy if you understand where to look (learn more here).
Now, let's take a peek at the latest action surrounding Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL).
At year's end, a total of 37 of the hedge funds we track were long in this stock, a change of 3% from the third quarter. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, OZ Management, managed by Daniel S. Och, holds the biggest position in Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL). OZ Management has a $155 million position in the stock, comprising 0.6% of its 13F portfolio. On OZ Management's heels is Luxor Capital Group, managed by Christian Leone, which held a $142 million position; the fund has 5% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include J Kevin Kenny Jr's Emerging Sovereign Group, Brian Kelly's Asian Century Quest and Rob Citrone's Discovery Capital Management.
As industrywide interest jumped, key money managers have jumped into Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) headfirst. Emerging Sovereign Group, managed by J Kevin Kenny Jr, created the biggest position in Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL). Emerging Sovereign Group had 74 million invested in the company at the end of the quarter. John Thaler's JAT Capital Management also made a $37 million investment in the stock during the quarter. The following funds were also among the new MPEL investors: Jim Simons's Renaissance Technologies, Donald Chiboucis's Columbus Circle Investors, and Malcolm Fairbairn's Ascend Capital.
Insider trading activity, especially when it's bullish, is best served when the company in focus has experienced transactions within the past 180 days. Over the latest half-year time period, Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the returns exhibited by our strategies, retail investors should always monitor hedge fund and insider trading sentiment, and Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) shareholders fit into this picture quite nicely.
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