Is The Phoenix Companies, Inc. (NYSE:PNX) a bargain? The best stock pickers are getting less optimistic. The number of long hedge fund positions were trimmed by 3 recently.
In the eyes of most market participants, hedge funds are viewed as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds trading at present, we look at the top tier 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 found a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as key, positive insider trading activity is another way to break down the financial markets. As the old adage goes: there are plenty of motivations for an insider to downsize shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this method if piggybackers understand where to look (learn more here).
With these "truths" under our belt, let's take a glance at the recent action surrounding The Phoenix Companies, Inc. (NYSE:PNX).
At Q1's end, a total of 5 of the hedge funds we track were bullish in this stock, a change of -38% from the first quarter. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly.
When looking at the hedgies we track, Martin Hughes's Toscafund Asset Management had the biggest position in The Phoenix Companies, Inc. (NYSE:PNX), worth close to $8.3 million, accounting for 5.3% of its total 13F portfolio. Coming in second is Dalton Investments, managed by Gifford Combs, which held a $0.6 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include D. E. Shaw's D E Shaw, Ken Griffin's Citadel Investment Group and Jim Simons's Renaissance Technologies.
Since The Phoenix Companies, Inc. (NYSE:PNX) has faced declining sentiment from the smart money, we can see that there exists a select few funds who sold off their entire stakes heading into Q2. Intriguingly, Joseph A. Jolson's Harvest Capital Strategies said goodbye to the largest investment of the 450+ funds we watch, worth close to $0.4 million in stock., and Cliff Asness of AQR Capital Management was right behind this move, as the fund dropped about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds heading into Q2.
Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past six months. Over the last half-year time frame, The Phoenix Companies, Inc. (NYSE:PNX) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the results exhibited by our tactics, everyday investors must always keep an eye on hedge fund and insider trading activity, and The Phoenix Companies, Inc. (NYSE:PNX) applies perfectly to this mantra.