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This Metric Says You Are Smart to Buy NIKE, Inc. (NYSE:NKE)

Is NIKE, Inc. (NYSE:NKE) a bargain? Prominent investors are turning bullish. The number of long hedge fund bets moved up by 2 recently.

In the eyes of most shareholders, hedge funds are perceived as worthless, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, we choose to focus on the aristocrats of this group, close to 450 funds. It is estimated that this group oversees most of the smart money’s total capital, and by tracking their best picks, we have spotted a few investment strategies that have historically beaten the S&P 500 index. 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 began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

NIKE, Inc. (NYSE:NKE)Equally as beneficial, optimistic insider trading activity is a second way to break down the world of equities. Obviously, there are a number of incentives for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if piggybackers know what to do (learn more here).

Consequently, we’re going to take a glance at the recent action surrounding NIKE, Inc. (NYSE:NKE).

What have hedge funds been doing with NIKE, Inc. (NYSE:NKE)?

At the end of the fourth quarter, a total of 38 of the hedge funds we track held long positions in this stock, a change of 6% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly.

When looking at the hedgies we track, Lansdowne Partners, managed by Paul Ruddockáand Steve Heinz, holds the biggest position in NIKE, Inc. (NYSE:NKE). Lansdowne Partners has a $657 million position in the stock, comprising 10.9% of its 13F portfolio. On Lansdowne Partners’s heels is Steven Cohen of SAC Capital Advisors, with a $134 million position; 1.7% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Donald Chiboucis’s Columbus Circle Investors, Ken Griffin’s Citadel Investment Group and Rob Citrone’s Discovery Capital Management.

Now, key hedge funds were breaking ground themselves. Sigma Capital Management, managed by SAC Subsidiary, established the biggest position in NIKE, Inc. (NYSE:NKE). Sigma Capital Management had 32 million invested in the company at the end of the quarter. John Armitage’s Egerton Capital Limited also made a $14 million investment in the stock during the quarter. The other funds with brand new NKE positions are Patrik Brummer’s Zenit Asset Management AB, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and Dmitry Balyasny’s Balyasny Asset Management.

How are insiders trading NIKE, Inc. (NYSE:NKE)?

Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the latest half-year time frame, NIKE, Inc. (NYSE:NKE) has experienced zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

With the results exhibited by our tactics, retail investors should always pay attention to hedge fund and insider trading activity, and NIKE, Inc. (NYSE:NKE) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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