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True Religion Apparel, Inc. (TRLG): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?

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Is it smart to be bullish on True Religion Apparel, Inc. (NASDAQ:TRLG)?

To many of your peers, hedge funds are assumed to be overrated, outdated financial tools of an era lost to time. Although there are more than 8,000 hedge funds with their doors open currently, this site aim at the elite of this group, about 525 funds. Analysts calculate that this group has its hands on most of the smart money’s total assets, and by keeping an eye on their best picks, we’ve deciphered a few investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outstripped 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 beaten the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as crucial, optimistic insider trading sentiment is a second way to analyze the world of equities. As the old adage goes: there are plenty of stimuli for an upper level exec to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).

What’s more, we’re going to examine the recent info surrounding True Religion Apparel, Inc. (NASDAQ:TRLG).

What does the smart money think about True Religion Apparel, Inc. (NASDAQ:TRLG)?

Heading into Q3, a total of 12 of the hedge funds we track held long positions in this stock, a change of -29% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.

True Religion Apparel, Inc. (NASDAQ:TRLG)When using filings from the hedgies we track, Cliff Asness’s AQR Capital Management had the largest position in True Religion Apparel, Inc. (NASDAQ:TRLG), worth close to $41.8 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Alpine Associates, managed by Robert Emil Zoellner, which held a $18.2 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Jim Simons’s Renaissance Technologies.

Judging by the fact that True Religion Apparel, Inc. (NASDAQ:TRLG) has faced bearish sentiment from the top-tier hedge fund industry, we can see that there were a few money managers who sold off their positions entirely last quarter. Intriguingly, Richard C. Patton’s Courage Capital dropped the largest investment of the 450+ funds we watch, totaling an estimated $6.2 million in stock, and Sander Gerber of Hudson Bay Capital Management was right behind this move, as the fund dropped about $5 million worth. These transactions are interesting, as total hedge fund interest was cut by 5 funds last quarter.

How are insiders trading True Religion Apparel, Inc. (NASDAQ:TRLG)?

Legal insider trading, particularly when it’s bullish, is best served when the company in question has experienced transactions within the past six months. Over the latest 180-day time frame, True Religion Apparel, Inc. (NASDAQ:TRLG) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to True Religion Apparel, Inc. (NASDAQ:TRLG). These stocks are Perry Ellis International, Inc. (NASDAQ:PERY), Maidenform Brands, Inc. (NYSE:MFB), Quiksilver, Inc. (NYSE:ZQK), Oxford Industries, Inc. (NYSE:OXM), and G-III Apparel Group, Ltd. (NASDAQ:GIII). This group of stocks belong to the textile – apparel clothing industry and their market caps resemble TRLG’s market cap.

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