This Metric Says You Are Smart to Buy Vitamin Shoppe Inc (VSI)

Vitamin Shoppe Inc (NYSE:VSI) was in 16 hedge funds’ portfolio at the end of March. VSI has seen an increase in hedge fund sentiment in recent months. There were 11 hedge funds in our database with VSI holdings at the end of the previous quarter.

To most investors, hedge funds are assumed to be worthless, outdated investment tools of the past. While there are over 8000 funds with their doors open at the moment, we choose to focus on the top tier of this club, around 450 funds. It is widely believed that this group oversees most of the hedge fund industry’s total asset base, and by tracking their top equity investments, we have deciphered a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as integral, bullish insider trading activity is a second way to parse down the financial markets. There are many reasons for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this strategy if shareholders know where to look (learn more here).

Consequently, let’s take a glance at the latest action regarding Vitamin Shoppe Inc (NYSE:VSI).

What have hedge funds been doing with Vitamin Shoppe Inc (NYSE:VSI)?

Heading into Q2, a total of 16 of the hedge funds we track were long in this stock, a change of 45% from one quarter earlier.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Moore Global Investments, managed by Louis Bacon, established the most valuable position in Vitamin Shoppe Inc (NYSE:VSI). Moore Global Investments had 4.9 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $2.7 million investment in the stock during the quarter. The other funds with brand new VSI positions are Scott Burney’s Bluefin Investment Management, Matthew Hulsizer’s PEAK6 Capital Management, and Israel Englander’s Catapult Capital Management.

How are insiders trading Vitamin Shoppe Inc (NYSE:VSI)?

Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last 180-day time period, Vitamin Shoppe Inc (NYSE:VSI) has seen 2 unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Vitamin Shoppe Inc (NYSE:VSI). These stocks are Five Below Inc (NASDAQ:FIVE), Office Depot Inc (NYSE:ODP), EZCORP Inc (NASDAQ:EZPW), Francesca’s Holdings Corp (NASDAQ:FRAN), and Coinstar, Inc. (NASDAQ:CSTR). This group of stocks are the members of the specialty retail, other industry and their market caps are similar to VSI’s market cap.

Company Name	# of Hedge Funds	# of Insiders Buying	# of Insiders Selling
Five Below Inc (NASDAQ:FIVE)	7	0	22
Office Depot Inc (NYSE:ODP)	28	4	0
EZCORP Inc (NASDAQ:EZPW)	15	0	4
Francesca’s Holdings Corp (NASDAQ:FRAN)	27	4	3
Coinstar, Inc. (NASDAQ:CSTR)	36	0	8

With the returns exhibited by the aforementioned time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Vitamin Shoppe Inc (NYSE:VSI) shareholders fit into this picture quite nicely.

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