According to most shareholders, hedge funds are seen as worthless, old investment tools of years past. While there are more than 8000 funds trading at the moment, we choose to focus on the masters of this club, around 450 funds. It is estimated that this group controls most of the hedge fund industry’s total asset base, and by monitoring their highest performing investments, we have discovered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as integral, bullish insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are plenty of motivations for an executive to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the useful potential of this method if piggybackers know what to do (learn more here).
With these “truths” under our belt, it’s important to take a peek at the recent action encompassing GameStop Corp. (NYSE:GME).
Hedge fund activity in GameStop Corp. (NYSE:GME)
In preparation for this quarter, a total of 26 of the hedge funds we track held long positions in this stock, a change of 8% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their stakes substantially.
According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the largest position in GameStop Corp. (NYSE:GME). Royce & Associates has a $137 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $111.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include John Murphy’s Alydar Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and John Murphy’s Alydar Capital.
Now, key hedge funds were breaking ground themselves. MAK Capital One, managed by Michael Kaufman, initiated the most outsized position in GameStop Corp. (NYSE:GME). MAK Capital One had 24.9 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $16 million investment in the stock during the quarter. The following funds were also among the new GME investors: Daniel S. Och’s OZ Management, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Scott Scher & Michael Prober’s Clovis Capital Management.
Insider trading activity in GameStop Corp. (NYSE:GME)
Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time period, GameStop Corp. (NYSE:GME) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to GameStop Corp. (NYSE:GME). These stocks are RadioShack Corporation (NYSE:RSH), hhgregg, Inc. (NYSE:HGG), CONN’S, Inc. (NASDAQ:CONN), and Best Buy Co., Inc. (NYSE:BBY). All of these stocks are in the electronics stores industry and their market caps are closest to GME’s market cap.
