The First Marblehead Corporation (NYSE:FMD) was in 5 hedge funds' portfolio at the end of March. FMD shareholders have witnessed a decrease in hedge fund interest recently. There were 6 hedge funds in our database with FMD positions at the end of the previous quarter.
To most traders, hedge funds are assumed to be slow, old investment tools of years past. While there are over 8000 funds with their doors open today, we at Insider Monkey choose to focus on the upper echelon of this club, around 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry's total asset base, and by tracking their highest performing equity investments, we have uncovered a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as beneficial, positive insider trading activity is a second way to break down the world of equities. Just as you'd expect, there are a number of stimuli for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this tactic if you know what to do (learn more here).
With these "truths" under our belt, we're going to take a peek at the latest action encompassing The First Marblehead Corporation (NYSE:FMD).
At the end of the first quarter, a total of 5 of the hedge funds we track held long positions in this stock, a change of -17% from one quarter earlier. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies we track, Phil Frohlich's Prescott Group Capital Management had the most valuable position in The First Marblehead Corporation (NYSE:FMD), worth close to $8.2 million, comprising 1.8% of its total 13F portfolio. The second largest stake is held by Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, which held a $2.5 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Paul Reeder and Edward Shapiro's PAR Capital Management, Jim Simons's Renaissance Technologies and Cliff Asness's AQR Capital Management.
Since The First Marblehead Corporation (NYSE:FMD) has experienced falling interest from the smart money, it's safe to say that there exists a select few hedge funds that slashed their full holdings heading into Q2. Intriguingly, Jay Petschek and Steven Major's Corsair Capital Management dumped the largest position of the 450+ funds we track, valued at about $0.1 million in stock.. Jacob Gottlieb's fund, Visium Asset Management, also sold off its stock, about $0.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds heading into Q2.
Insider purchases made by high-level executives is most useful when the company in question has experienced transactions within the past half-year. Over the latest 180-day time period, The First Marblehead Corporation (NYSE:FMD) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey's strategies, retail investors should always pay attention to hedge fund and insider trading activity, and The First Marblehead Corporation (NYSE:FMD) applies perfectly to this mantra.