This Metric Says You Are Smart to Sell Republic Services, Inc. (NYSE:RSG)

Is Republic Services, Inc. (NYSE:RSG) a first-rate investment right now? The smart money is getting less optimistic. The number of long hedge fund positions retreated by 3 lately.

Republic Services, Inc. (NYSE:RSG)

If you’d ask most shareholders, hedge funds are viewed as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, we at Insider Monkey hone in on the masters of this club, around 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total asset base, and by paying attention to their best equity investments, we have deciphered a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Equally as integral, positive insider trading activity is a second way to parse down the marketplace. There are a number of stimuli for an executive to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the key action regarding Republic Services, Inc. (NYSE:RSG).

What does the smart money think about Republic Services, Inc. (NYSE:RSG)?

At year’s end, a total of 19 of the hedge funds we track were bullish in this stock, a change of -14% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings meaningfully.

When looking at the hedgies we track, East Side Capital (RR Partners), managed by Steven Richman, holds the biggest position in Republic Services, Inc. (NYSE:RSG). East Side Capital (RR Partners) has a $71 million position in the stock, comprising 4% of its 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which held a $61 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Michael Larson’s Bill & Melinda Gates Foundation Trust and D. E. Shaw’s D E Shaw.

Due to the fact that Republic Services, Inc. (NYSE:RSG) has faced falling interest from the smart money, it’s safe to say that there lies a certain “tier” of fund managers that decided to sell off their full holdings at the end of the year. Interestingly, Mason Hawkins’s Southeastern Asset Management sold off the largest position of all the hedgies we watch, totaling about $16 million in stock.. Ken Gray and Steve Walsh’s fund, Bryn Mawr Capital, also dumped its stock, about $4 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds at the end of the year.

How are insiders trading Republic Services, Inc. (NYSE:RSG)?

Insider purchases made by high-level executives is best served when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time period, Republic Services, Inc. (NYSE:RSG) has seen 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

With the returns shown by our research, retail investors should always watch hedge fund and insider trading sentiment, and Republic Services, Inc. (NYSE:RSG) applies perfectly to this mantra.

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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