Is The Pep Boys – Manny, Moe & Jack (NYSE:PBY) a healthy stock for your portfolio? Investors who are in the know are taking a bearish view. The number of long hedge fund bets went down by 1 lately.
To the average investor, there are many metrics investors can use to watch the equity markets. A duo of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top fund managers can outperform the market by a significant amount (see just how much).
Just as important, optimistic insider trading activity is a second way to parse down the world of equities. There are lots of reasons for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).
Keeping this in mind, it’s important to take a glance at the latest action regarding The Pep Boys – Manny, Moe & Jack (NYSE:PBY).
How are hedge funds trading The Pep Boys – Manny, Moe & Jack (NYSE:PBY)?
At year’s end, a total of 12 of the hedge funds we track were long in this stock, a change of -8% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially.
When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the most valuable position in The Pep Boys – Manny, Moe & Jack (NYSE:PBY), worth close to $45 million, comprising 0.3% of its total 13F portfolio. The second largest stake is held by Glenn J. Krevlin of Glenhill Advisors, with a $15 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Thomas Steyer’s Farallon Capital, J. Carlo Cannell’s Cannell Capital and Jim Simons’s Renaissance Technologies.
Judging by the fact that The Pep Boys – Manny, Moe & Jack (NYSE:PBY) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers that elected to cut their entire stakes at the end of the year. It’s worth mentioning that Ward Davis and Brian Agnew’s Caerus Global Investors dumped the largest stake of the “upper crust” of funds we key on, totaling about $2 million in stock.. Jacob Gottlieb’s fund, Visium Asset Management, also sold off its stock, about $1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds at the end of the year.
How have insiders been trading The Pep Boys – Manny, Moe & Jack (NYSE:PBY)?
Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last half-year time frame, The Pep Boys – Manny, Moe & Jack (NYSE:PBY) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to The Pep Boys – Manny, Moe & Jack (NYSE:PBY). These stocks are AutoZone, Inc. (NYSE:AZO), O’Reilly Automotive Inc (NASDAQ:ORLY), U.S. Auto Parts Network, Inc. (NASDAQ:PRTS), , and Advance Auto Parts, Inc. (NYSE:AAP). This group of stocks are the members of the auto parts stores industry and their market caps are similar to PBY’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|AutoZone, Inc. (NYSE:AZO)||39||0||14|
|O’Reilly Automotive Inc (NASDAQ:ORLY)||22||0||9|
|U.S. Auto Parts Network, Inc. (NASDAQ:PRTS)||3||2||0|
|Advance Auto Parts, Inc. (NYSE:AAP)||34||0||12|
With the returns exhibited by our time-tested strategies, everyday investors should always watch hedge fund and insider trading activity, and The Pep Boys – Manny, Moe & Jack (NYSE:PBY) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.