Are the world's richest investors smart to sell State Street Corporation (NYSE:STT)?
In the 21st century investor’s toolkit, there are plenty of metrics investors can use to watch stocks. A couple of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the market by a solid margin (see just how much).
Just as useful, optimistic insider trading activity is another way to analyze the financial markets. There are lots of incentives for an upper level exec to drop shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).
Now that that's out of the way, we're going to examine the recent info about State Street Corporation (NYSE:STT).
Heading into Q3, a total of 32 of the hedge funds we track were long in this stock, a change of -16% from one quarter earlier. With the smart money's capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly.
When using filings from the hedgies we track, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in State Street Corporation (NYSE:STT). Pzena Investment Management has a $278.2 million position in the stock, comprising 1.9% of its 13F portfolio. On Pzena Investment Management's heels is Natixis Global Asset Management of Harris Associates, with a $185 million position; 0.4% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Rob Citrone's Discovery Capital Management, Donald Yacktman's Yacktman Asset Management and Ken Griffin's Citadel Investment Group.
Because State Street Corporation (NYSE:STT) has witnessed declining interest from the smart money's best and brightest, it's safe to say that there was a specific group of hedge funds who sold off their full holdings last quarter. Intriguingly, Vinit Bodas's Deccan Value Advisors said goodbye to the largest position of the 450+ funds we track, comprising close to $30.4 million in stock, and Jim Simons of Renaissance Technologies was right behind this move, as the fund sold off about $28.9 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 6 funds last quarter.
Insider buying is particularly usable when the company in focus has experienced transactions within the past six months. Over the latest 180-day time period, State Street Corporation (NYSE:STT) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to State Street Corporation (NYSE:STT). These stocks are BlackRock, Inc. (NYSE:BLK), T. Rowe Price Group, Inc. (NASDAQ:TROW), The Bank of New York Mellon Corporation (NYSE:BK), The Blackstone Group L.P. (NYSE:BX), and Franklin Resources, Inc. (NYSE:BEN). This group of stocks are the members of the asset management industry and their market caps are similar to STT's market cap.