Tree.com Inc (NASDAQ:TREE) investors should pay attention to an increase in support from the world's most elite money managers in recent months.
To most stock holders, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open today, we look at the top tier of this club, around 450 funds. It is widely believed that this group controls most of the smart money's total asset base, and by tracking their best equity investments, we have formulated a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as integral, positive insider trading activity is another way to break down the stock market universe. As the old adage goes: there are a number of motivations for a bullish insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the impressive potential of this method if investors know what to do (learn more here).
With all of this in mind, it's important to take a look at the key action encompassing Tree.com Inc (NASDAQ:TREE).
At the end of the first quarter, a total of 5 of the hedge funds we track were bullish in this stock, a change of 25% from the first quarter. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.
Of the funds we track, Second Curve Capital, managed by Tom Brown, holds the most valuable position in Tree.com Inc (NASDAQ:TREE). Second Curve Capital has a $7.8 million position in the stock, comprising 2% of its 13F portfolio. On Second Curve Capital's heels is Royce & Associates, managed by Chuck Royce, which held a $4.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Peter A. Wright's P.A.W. CAPITAL PARTNERS, Jim Simons's Renaissance Technologies and Israel Englander's Millennium Management.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, established the biggest position in Tree.com Inc (NASDAQ:TREE). Millennium Management had 0.5 million invested in the company at the end of the quarter.
Insider trading activity, especially when it's bullish, is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last 180-day time frame, Tree.com Inc (NASDAQ:TREE) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
With the returns demonstrated by our studies, retail investors should always watch hedge fund and insider trading sentiment, and Tree.com Inc (NASDAQ:TREE) shareholders fit into this picture quite nicely.