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Toyota Motor Corporation (ADR) (TM): Hedge Funds and Insiders Are Bearish, What Should You Do?

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Toyota Motor Corporation (ADR) (NYSE:TM) was in 15 hedge funds’ portfolio at the end of March. TM investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 15 hedge funds in our database with TM holdings at the end of the previous quarter.

According to most stock holders, hedge funds are viewed as worthless, outdated financial tools of the past. While there are more than 8000 funds in operation at present, we look at the moguls of this club, close to 450 funds. Most estimates calculate that this group has its hands on the majority of the hedge fund industry’s total capital, and by monitoring their best stock picks, we have determined a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Toyota Motor Corporation (ADR) (NYSE:TM)Just as integral, optimistic insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are a variety of reasons for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here).

With all of this in mind, we’re going to take a glance at the latest action surrounding Toyota Motor Corporation (ADR) (NYSE:TM).

How are hedge funds trading Toyota Motor Corporation (ADR) (NYSE:TM)?

Heading into Q2, a total of 15 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings meaningfully.

When looking at the hedgies we track, Ken Fisher’s Fisher Asset Management had the biggest position in Toyota Motor Corporation (ADR) (NYSE:TM), worth close to $464.6 million, accounting for 1.2% of its total 13F portfolio. On Fisher Asset Management’s heels is Ken Heebner of Capital Growth Management, with a $30.8 million position; 0.8% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Michael Larson’s Bill & Melinda Gates Foundation Trust and Crispin Odey’s Odey Asset Management Group.

Seeing as Toyota Motor Corporation (ADR) (NYSE:TM) has experienced declining sentiment from hedge fund managers, logic holds that there is a sect of hedgies who were dropping their full holdings heading into Q2. Intriguingly, Jim Simons’s Renaissance Technologies dumped the largest investment of all the hedgies we key on, worth an estimated $24.9 million in stock.. William B. Gray’s fund, Orbis Investment Management, also cut its stock, about $2.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Toyota Motor Corporation (ADR) (NYSE:TM)?

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time period, Toyota Motor Corporation (ADR) (NYSE:TM) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Toyota Motor Corporation (ADR) (NYSE:TM). These stocks are Tata Motors Limited (ADR) (NYSE:TTM), General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), and Honda Motor Co Ltd (ADR) (NYSE:HMC). This group of stocks are the members of the auto manufacturers – major industry and their market caps resemble TM’s market cap.

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