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This Metric Says You Are Smart to Buy Steiner Leisure Ltd (STNR)

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Steiner Leisure Ltd (NASDAQ:STNR) was in 10 hedge funds’ portfolio at the end of the first quarter of 2013. STNR shareholders have witnessed an increase in enthusiasm from smart money lately. There were 5 hedge funds in our database with STNR positions at the end of the previous quarter.

In the eyes of most market participants, hedge funds are seen as slow, old financial vehicles of the past. While there are over 8000 funds trading at present, we look at the top tier of this group, around 450 funds. It is estimated that this group controls most of the smart money’s total capital, and by watching their top investments, we have identified a few investment strategies that have historically outstripped Mr. 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 started 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 (see all of our picks from August).

Just as beneficial, positive insider trading activity is a second way to break down the stock market universe. Just as you’d expect, there are lots of motivations for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the impressive potential of this strategy if investors understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the latest action regarding Steiner Leisure Ltd (NASDAQ:STNR).

Hedge fund activity in Steiner Leisure Ltd (NASDAQ:STNR)

Heading into Q2, a total of 10 of the hedge funds we track were bullish in this stock, a change of 100% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially.


According to our comprehensive database, Ric Dillon’s Diamond Hill Capital had the most valuable position in Steiner Leisure Ltd (NASDAQ:STNR), worth close to $41.1 million, comprising 0.4% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include Matthew Lindenbaum’s Basswood Capital, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

As industrywide interest jumped, key money managers have jumped into Steiner Leisure Ltd (NASDAQ:STNR) headfirst. Renaissance Technologies, managed by Jim Simons, created the most valuable position in Steiner Leisure Ltd (NASDAQ:STNR). Renaissance Technologies had 2.8 million invested in the company at the end of the quarter. Matthew Lindenbaum’s Basswood Capital also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Cliff Asness’s AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Joel Greenblatt’s Gotham Asset Management.

How are insiders trading Steiner Leisure Ltd (NASDAQ:STNR)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, Steiner Leisure Ltd (NASDAQ:STNR) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Steiner Leisure Ltd (NASDAQ:STNR). These stocks are Regis Corporation (NYSE:RGS), StoneMor Partners L.P. (NYSE:STON), eLong, Inc. (ADR) (NASDAQ:LONG), G&K Services Inc (NASDAQ:GK), and Stewart Enterprises, Inc. (NASDAQ:STEI). All of these stocks are in the personal services industry and their market caps are similar to STNR’s market cap.

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