Standard Pacific Corp. (SPF): Hedge Funds and Insiders Are Bearish, What Should You Do?: Gafisa SA (ADR) (GFA), Meritage Homes Corp (MTH)

Standard Pacific Corp. (NYSE:SPF) has experienced a decrease in support from the world’s most elite money managers of late.

Standard Pacific Corp. (NYSE:SPF)In the eyes of most investors, hedge funds are viewed as underperforming, old financial vehicles of the past. While there are over 8000 funds with their doors open today, we at Insider Monkey choose to focus on the top tier of this group, about 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total asset base, and by watching their best stock picks, we have figured out a few investment strategies that have historically outpaced 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 began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).

Just as beneficial, optimistic insider trading activity is a second way to parse down the marketplace. Obviously, there are plenty of reasons for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this method if investors know where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the latest action regarding Standard Pacific Corp. (NYSE:SPF).

How have hedgies been trading Standard Pacific Corp. (NYSE:SPF)?

In preparation for this year, a total of 11 of the hedge funds we track were bullish in this stock, a change of -35% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Randall Smith’s Alden Global Capital had the largest position in Standard Pacific Corp. (NYSE:SPF), worth close to $18 million, accounting for 3.2% of its total 13F portfolio. On Alden Global Capital’s heels is Ken Griffin of Citadel Investment Group, with a $17 million position; the fund has 0% of its 13F portfolio invested in the stock. Some other peers that are bullish include Ken Heebner’s Capital Growth Management, Chuck Royce’s Royce & Associates and Donald Chiboucis’s Columbus Circle Investors.

Judging by the fact that Standard Pacific Corp. (NYSE:SPF) has witnessed bearish sentiment from hedge fund managers, we can see that there was a specific group of hedge funds who sold off their entire stakes last quarter. Interestingly, Christopher Medlock James’s Partner Fund Management said goodbye to the biggest stake of the “upper crust” of funds we key on, comprising an estimated $5 million in stock.. Alexander Mitchell’s fund, Scopus Asset Management, also dumped its stock, about $3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 6 funds last quarter.

Insider trading activity in Standard Pacific Corp. (NYSE:SPF)

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past half-year. Over the latest six-month time frame, Standard Pacific Corp. (NYSE:SPF) has experienced zero unique insiders buying, and zero 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 Standard Pacific Corp. (NYSE:SPF). These stocks are Gafisa SA (ADR) (NYSE:GFA), Meritage Homes Corp (NYSE:MTH), M.D.C. Holdings, Inc. (NYSE:MDC), The Ryland Group, Inc. (NYSE:RYL), and KB Home (NYSE:KBH). This group of stocks are the members of the residential construction industry and their market caps resemble SPF’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Gafisa SA (ADR) (NYSE:GFA) 5 0 0
Meritage Homes Corp (NYSE:MTH) 8 0 7
M.D.C. Holdings, Inc. (NYSE:MDC) 12 0 4
The Ryland Group, Inc. (NYSE:RYL) 15 0 5
KB Home (NYSE:KBH) 10 0 0

With the returns shown by the aforementioned strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Standard Pacific Corp. (NYSE:SPF) is no exception.

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