The Gap Inc. (NYSE:GPS) has experienced a decrease in enthusiasm from smart money recently.
If you’d ask most shareholders, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation today, we look at the moguls of this club, about 450 funds. It is estimated that this group oversees the majority of the hedge fund industry’s total asset base, and by keeping an eye on their best investments, we have identified a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 topped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as important, positive insider trading sentiment is another way to parse down the world of equities. There are many reasons for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the useful potential of this strategy if investors know what to do (learn more here).
Consequently, it’s important to take a peek at the latest action encompassing The Gap Inc. (NYSE:GPS).
What does the smart money think about The Gap Inc. (NYSE:GPS)?
In preparation for this year, a total of 29 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably.
Of the funds we track, Stephen Mandel’s Lone Pine Capital had the biggest position in The Gap Inc. (NYSE:GPS), worth close to $575.1 million, comprising 3.6% of its total 13F portfolio. Sitting at the No. 2 spot is Edward Lampert of ESL Investments, with a $444.5 million position; the fund has 11.6% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Cliff Asness’s AQR Capital Management, Jim Simons’s Renaissance Technologies and Jean-Marie Eveillard’s First Eagle Investment Management.
Due to the fact that The Gap Inc. (NYSE:GPS) has experienced a declination in interest from hedge fund managers, logic holds that there exists a select few funds who sold off their positions entirely last quarter. Intriguingly, Donald Chiboucis’s Columbus Circle Investors dropped the largest stake of the “upper crust” of funds we key on, valued at an estimated $67.4 million in stock.. Panayotis æTakisÆ Sparaggis’s fund, Alkeon Capital Management, also cut its stock, about $58.6 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading The Gap Inc. (NYSE:GPS)?
Insider buying is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest six-month time period, The Gap Inc. (NYSE:GPS) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to The Gap Inc. (NYSE:GPS). These stocks are Urban Outfitters, Inc. (NASDAQ:URBN), Nordstrom, Inc. (NYSE:JWN), Michael Kors Holdings Ltd (NYSE:KORS), Limited Brands, Inc. (NYSE:LTD), and Ross Stores, Inc. (NASDAQ:ROST). This group of stocks are in the apparel stores industry and their market caps match GPS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Urban Outfitters, Inc. (NASDAQ:URBN) | 25 | 0 | 5 |
| Nordstrom, Inc. (NYSE:JWN) | 26 | 0 | 6 |
| Michael Kors Holdings Ltd (NYSE:KORS) | 39 | 0 | 0 |
| Limited Brands, Inc. (NYSE:LTD) | 19 | 0 | 0 |
| Ross Stores, Inc. (NASDAQ:ROST) | 30 | 0 | 6 |
With the results exhibited by Insider Monkey’s research, everyday investors should always monitor hedge fund and insider trading sentiment, and The Gap Inc. (NYSE:GPS) shareholders fit into this picture quite nicely.
See the 7 most bullish money managers:
