Target Corporation (NYSE:TGT) saw its bottom line fall today in its latest earnings report, and shares are off 3.5% as a result. With that in mind, hedge funds are standing pat.
In the financial world, there are tons of gauges investors can use to analyze the equity markets. A pair of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can trounce the broader indices by a healthy margin (see just how much).
Just as useful, optimistic insider trading sentiment is another way to analyze the marketplace. As the old adage goes: there are a variety of stimuli for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this strategy if shareholders know what to do (learn more here).
Now that that's out of the way, it's important to study the latest info surrounding Target Corporation (NYSE:TGT).
At Q2's end, a total of 33 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their stakes meaningfully.
Out of the hedge funds we follow, John A. Levin's Levin Capital Strategies had the largest position in Target Corporation (NYSE:TGT), worth close to $123.4 million, comprising 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Matt McLennan of First Eagle Investment Management, with a $102.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include David Costen Haley's HBK Investments, Bill Miller's Legg Mason Capital Management and Phill Gross and Robert Atchinson's Adage Capital Management.
As Target Corporation (NYSE:TGT) has experienced declining interest from upper-tier hedge fund managers, it's safe to say that there lies a certain "tier" of funds who sold off their positions entirely in Q1. At the top of the heap, Larry Robbins's Glenview Capital cut the largest position of all the hedgies we track, totaling close to $116.7 million in stock, and Ken Griffin of Citadel Investment Group was right behind this move, as the fund dropped about $43.9 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest 180-day time frame, Target Corporation (NYSE:TGT) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).
We'll also review the relationship between both of these indicators in other stocks similar to Target Corporation (NYSE:TGT). These stocks are Family Dollar Stores, Inc. (NYSE:FDO), Wal-Mart Stores, Inc. (NYSE:WMT), Dollar Tree, Inc. (NASDAQ:DLTR), Dollar General Corp. (NYSE:DG), and Costco Wholesale Corporation (NASDAQ:COST). All of these stocks are in the discount, variety stores industry and their market caps resemble TGT's market cap.