Lender Processing Services, Inc. (NYSE:LPS) was in 23 hedge funds’ portfolio at the end of the first quarter of 2013. LPS investors should be aware of an increase in enthusiasm from smart money lately. There were 19 hedge funds in our database with LPS holdings at the end of the previous quarter.
In the eyes of most stock holders, hedge funds are perceived as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the upper echelon of this club, around 450 funds. It is estimated that this group has its hands on most of the hedge fund industry’s total capital, and by paying attention to their top investments, we have spotted a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as important, optimistic insider trading activity is a second way to parse down the marketplace. Obviously, there are many reasons for an upper level exec to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this method if investors know where to look (learn more here).
With these “truths” under our belt, it’s important to take a look at the recent action surrounding Lender Processing Services, Inc. (NYSE:LPS).
How are hedge funds trading Lender Processing Services, Inc. (NYSE:LPS)?
At Q1’s end, a total of 23 of the hedge funds we track were long in this stock, a change of 21% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially.
Of the funds we track, Highfields Capital Management, managed by Jonathon Jacobson, holds the most valuable position in Lender Processing Services, Inc. (NYSE:LPS). Highfields Capital Management has a $47.8 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $35.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Michael Blitzer’s Kingstown Capital Management, Clint Carlson’s Carlson Capital and Gilchrist Berg’s Water Street Capital.
With a general bullishness amongst the heavyweights, key money managers have jumped into Lender Processing Services, Inc. (NYSE:LPS) headfirst. Highfields Capital Management, managed by Jonathon Jacobson, assembled the largest position in Lender Processing Services, Inc. (NYSE:LPS). Highfields Capital Management had 47.8 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also made a $27.4 million investment in the stock during the quarter. The other funds with brand new LPS positions are SAC Subsidiary’s Sigma Capital Management, Joseph A. Jolson’s Harvest Capital Strategies, and Richard C. Patton’s Courage Capital.
How are insiders trading Lender Processing Services, Inc. (NYSE:LPS)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time frame, Lender Processing Services, Inc. (NYSE:LPS) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Lender Processing Services, Inc. (NYSE:LPS). These stocks are HMS Holdings Corp. (NASDAQ:HMSY), Ritchie Bros. Auctioneers (USA) (NYSE:RBA), Deluxe Corporation (NYSE:DLX), Portfolio Recovery Associates, Inc. (NASDAQ:PRAA), and RR Donnelley & Sons Co (NASDAQ:RRD). All of these stocks are in the business services industry and their market caps are similar to LPS’s market cap.