Sothebys (NYSE:BID) has seen a decrease in hedge fund interest lately.
To most investors, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are greater than 8000 funds trading at present, we choose to focus on the crème de la crème of this club, around 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total capital, and by paying attention to their highest performing picks, we have spotted a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as beneficial, optimistic insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are plenty of stimuli for a bullish insider to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).
Consequently, let’s take a gander at the recent action regarding Sothebys (NYSE:BID).
How are hedge funds trading Sothebys (NYSE:BID)?
At year’s end, a total of 14 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully.
According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the biggest position in Sothebys (NYSE:BID). Royce & Associates has a $162 million position in the stock, comprising 0.5% of its 13F portfolio. On Royce & Associates’s heels is John W. Rogers of Ariel Investments, with a $73 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Ken Fisher’s Fisher Asset Management, Kerr Neilson’s Platinum Asset Management and Mariko Gordon’s Daruma Asset Management.
Since Sothebys (NYSE:BID) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of fund managers who were dropping their positions entirely heading into 2013. It’s worth mentioning that D. E. Shaw’s D E Shaw dumped the largest position of the “upper crust” of funds we monitor, totaling close to $2 million in stock.. Cliff Asness’s fund, AQR Capital Management, also dumped its stock, about $1 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Sothebys (NYSE:BID)?
Bullish insider trading is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest half-year time frame, Sothebys (NYSE:BID) has experienced zero unique insiders buying, and 10 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 Sothebys (NYSE:BID). These stocks are Francesca’s Holdings Corp (NASDAQ:FRAN), Vitamin Shoppe Inc (NYSE:VSI), Coinstar, Inc. (NASDAQ:CSTR), Five Below Inc (NASDAQ:FIVE), and HSN, Inc. (NASDAQ:HSNI). This group of stocks are in the specialty retail, other industry and their market caps resemble BID’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Francesca’s Holdings Corp (NASDAQ:FRAN)||21||4||1|
|Vitamin Shoppe Inc (NYSE:VSI)||11||2||2|
|Coinstar, Inc. (NASDAQ:CSTR)||28||0||6|
|Five Below Inc (NASDAQ:FIVE)||6||0||22|
|HSN, Inc. (NASDAQ:HSNI)||10||1||8|
With the results shown by Insider Monkey’s strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Sothebys (NYSE:BID) applies perfectly to this mantra.