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Should You Buy Roundy’s Inc (RNDY)?: Core-Mark Holding Company, Inc. (CORE), Ingles Markets, Incorporated (IMKTA)

Is Roundy’s Inc (NYSE:RNDY) worth your attention right now? Money managers are buying. The number of bullish hedge fund bets improved by 4 lately.


If you’d ask most traders, hedge funds are seen as worthless, old investment tools of years past. While there are over 8000 funds trading at present, we at Insider Monkey look at the upper echelon of this group, around 450 funds. Most estimates calculate that this group controls most of the smart money’s total asset base, and by keeping an eye on their best equity investments, we have unsheathed a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Equally as key, optimistic insider trading activity is another way to break down the investments you’re interested in. Just as you’d expect, there are a number of stimuli for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this strategy if investors understand where to look (learn more here).

Now, let’s take a glance at the latest action regarding Roundy’s Inc (NYSE:RNDY).

How are hedge funds trading Roundy’s Inc (NYSE:RNDY)?

Heading into 2013, a total of 10 of the hedge funds we track held long positions in this stock, a change of 67% from the third quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Chase Coleman and Feroz Dewan’s Tiger Global Management LLC had the biggest position in Roundy’s Inc (NYSE:RNDY), worth close to $3 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $0 million position; the fund has 0% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group and Bill Miller’s Legg Mason Capital Management.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, assembled the largest position in Roundy’s Inc (NYSE:RNDY). Renaissance Technologies had 0 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter. The other funds with brand new RNDY positions are Bill Miller’s Legg Mason Capital Management, Joel Greenblatt’s Gotham Asset Management, and Steven Cohen’s SAC Capital Advisors.

How are insiders trading Roundy’s Inc (NYSE:RNDY)?

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest 180-day time period, Roundy’s Inc (NYSE:RNDY) has seen 10 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Roundy’s Inc (NYSE:RNDY). These stocks are Core-Mark Holding Company, Inc. (NASDAQ:CORE), Ingles Markets, Incorporated (NASDAQ:IMKTA), Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), Arden Group, Inc. (NASDAQ:ARDNA), and The Pantry, Inc. (NASDAQ:PTRY). All of these stocks are in the grocery stores industry and their market caps resemble RNDY’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Core-Mark Holding Company, Inc. (NASDAQ:CORE) 12 0 5
Ingles Markets, Incorporated (NASDAQ:IMKTA) 2 0 0
Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) 7 1 2
Arden Group, Inc. (NASDAQ:ARDNA) 2 0 0
The Pantry, Inc. (NASDAQ:PTRY) 9 0 4

With the returns shown by the aforementioned strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Roundy’s Inc (NYSE:RNDY) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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