SUPERVALU INC. (NYSE:SVU) investors should be aware of a decrease in enthusiasm from smart money recently.
According to most traders, hedge funds are seen as underperforming, old financial vehicles of years past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey look at the masters of this club, close to 450 funds. It is widely believed that this group oversees the lion's share of the smart money's total asset base, and by keeping an eye on their highest performing equity investments, we have found a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as important, bullish insider trading activity is a second way to break down the financial markets. There are lots of reasons for an executive to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this strategy if piggybackers know what to do (learn more here).
With all of this in mind, let's take a glance at the latest action surrounding SUPERVALU INC. (NYSE:SVU).
At the end of the fourth quarter, a total of 21 of the hedge funds we track held long positions in this stock, a change of -13% from the third quarter. With hedgies' capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, Philippe Laffont's Coatue Management had the largest position in SUPERVALU INC. (NYSE:SVU), worth close to $25 million, comprising 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Saba Capital, managed by Boaz Weinstein, which held a $20 million position; 2.2% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Andrew Feldstein and Stephen Siderow's Blue Mountain Capital, Don Morgan's Brigade Capital and Jeffrey Altman's Owl Creek Asset Management.
Because SUPERVALU INC. (NYSE:SVU) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of fund managers that slashed their entire stakes heading into 2013. Intriguingly, Lee Ainslie's Maverick Capital said goodbye to the biggest stake of the 450+ funds we watch, valued at an estimated $21 million in stock., and Steven Tananbaum of GoldenTree Asset Management was right behind this move, as the fund said goodbye to about $10 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds heading into 2013.
Insider purchases made by high-level executives is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, SUPERVALU INC. (NYSE:SVU) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
With the returns demonstrated by Insider Monkey's time-tested strategies, retail investors should always pay attention to hedge fund and insider trading activity, and SUPERVALU INC. (NYSE:SVU) is no exception.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.