Shutterfly, Inc. (NASDAQ:SFLY) has experienced a decrease in activity from the world's largest hedge funds recently.
If you'd ask most shareholders, hedge funds are seen as slow, old investment tools of yesteryear. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey look at the leaders of this group, close to 450 funds. Most estimates calculate that this group controls the lion's share of all hedge funds' total asset base, and by monitoring their best investments, we have come up with a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped 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 outpaced the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as key, positive insider trading sentiment is a second way to break down the stock market universe. As the old adage goes: there are a number of motivations for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this method if investors understand where to look (learn more here).
Keeping this in mind, let's take a glance at the key action surrounding Shutterfly, Inc. (NASDAQ:SFLY).
Heading into 2013, a total of 14 of the hedge funds we track were bullish in this stock, a change of -18% from one quarter earlier. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their holdings significantly.
According to our comprehensive database, George Soros's Soros Fund Management had the largest position in Shutterfly, Inc. (NASDAQ:SFLY), worth close to $91 million, accounting for 1.1% of its total 13F portfolio. The second largest stake is held by Alydar Capital, managed by John Murphy, which held a $80 million position; 6.2% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include Mariko Gordon's Daruma Asset Management, Mario Cibelli's Marathon Partners and Eric Bannasch's Cadian Capital.
Due to the fact that Shutterfly, Inc. (NASDAQ:SFLY) has experienced declining sentiment from the smart money, it's safe to say that there lies a certain "tier" of hedge funds that elected to cut their full holdings at the end of the year. Intriguingly, Eric Semler's TCS Capital Management said goodbye to the largest investment of all the hedgies we key on, valued at an estimated $3.1 million in stock.. Ward Davis and Brian Agnew's fund, Caerus Global Investors, also said goodbye to its stock, about $1.8 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds at the end of the year.
Bullish insider trading is best served when the company we're looking at has experienced transactions within the past half-year. Over the latest six-month time period, Shutterfly, Inc. (NASDAQ:SFLY) has seen zero unique insiders buying, and 9 insider sales (see the details of insider trades here).
Let's also review hedge fund and insider activity in other stocks similar to Shutterfly, Inc. (NASDAQ:SFLY). These stocks are Sohu.com Inc (NASDAQ:SOHU), OpenTable Inc (NASDAQ:OPEN), Yelp Inc (NYSE:YELP), Kayak Software Corp (NASDAQ:KYAK), and InterXion Holding NV (NYSE:INXN). This group of stocks belong to the internet information providers industry and their market caps are similar to SFLY's market cap.