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This Metric Says You Are Smart to Buy The Home Depot, Inc. (NYSE:HD)

The Home Depot, Inc. (NYSE:HD) was in 44 hedge funds’ portfolio at the end of December. HD investors should pay attention to an increase in support from the world’s most elite money managers in recent months. There were 39 hedge funds in our database with HD positions at the end of the previous quarter.

In the financial world, there are dozens of methods investors can use to track Mr. Market. A duo of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can beat the S&P 500 by a superb margin (see just how much).

The Home Depot, Inc. (NYSE:HD)

Just as integral, bullish insider trading sentiment is a second way to break down the investments you’re interested in. There are a number of motivations for an executive to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this method if “monkeys” understand what to do (learn more here).

Keeping this in mind, we’re going to take a look at the recent action regarding The Home Depot, Inc. (NYSE:HD).

What have hedge funds been doing with The Home Depot, Inc. (NYSE:HD)?

At the end of the fourth quarter, a total of 44 of the hedge funds we track held long positions in this stock, a change of 13% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably.

Of the funds we track, Fisher Asset Management, managed by Ken Fisher, holds the largest position in The Home Depot, Inc. (NYSE:HD). Fisher Asset Management has a $512 million position in the stock, comprising 1.4% of its 13F portfolio. On Fisher Asset Management’s heels is Columbus Circle Investors, managed by Donald Chiboucis, which held a $143 million position; 3.8% of its 13F portfolio is allocated to the company. Other peers that are bullish include Patrick McCormack’s Tiger Consumer Management, Jim Simons’s Renaissance Technologies and Phill Gross and Robert Atchinson’s Adage Capital Management.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into The Home Depot, Inc. (NYSE:HD) headfirst. Merchants’ Gate Capital, managed by Jason Capello, assembled the most outsized position in The Home Depot, Inc. (NYSE:HD). Merchants’ Gate Capital had 84 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also made a $19 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Sandler’s Sandler Capital Management, Daniel S. Och’s OZ Management, and SAC Subsidiary’s CR Intrinsic Investors.

Insider trading activity in The Home Depot, Inc. (NYSE:HD)

Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past six months. Over the last six-month time period, The Home Depot, Inc. (NYSE:HD) has experienced 1 unique insiders buying, and 7 insider sales (see the details of insider trades here).

With the results demonstrated by our time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and The Home Depot, Inc. (NYSE:HD) shareholders fit into this picture quite nicely.

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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