To many of your peers, hedge funds are seen as bloated, old investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds trading currently, this site focuses on the moguls of this group, around 525 funds. Analysts calculate that this group oversees most of all hedge funds’ total assets, and by watching their highest quality stock picks, we’ve discovered a few investment strategies that have historically outstripped Mr. Market. 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 started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as key, bullish insider trading sentiment is another way to analyze the world of equities. There are a number of reasons for an executive to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this strategy if shareholders know where to look (learn more here).
Thus, it’s important to discuss the recent info surrounding Waddell & Reed Financial, Inc. (NYSE:WDR).
Hedge fund activity in Waddell & Reed Financial, Inc. (NYSE:WDR)
Heading into Q3, a total of 18 of the hedge funds we track were bullish in this stock, a change of 38% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes substantially.
When using filings from the hedgies we track, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Waddell & Reed Financial, Inc. (NYSE:WDR). Fisher Asset Management has a $97.7 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $51.6 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include David Dreman’s Dreman Value Management, Ken Griffin’s Citadel Investment Group and Mario Gabelli’s GAMCO Investors.
With a general bullishness amongst the titans, certain bigger names were leading the bulls’ herd. Fisher Asset Management, managed by Ken Fisher, established the largest position in Waddell & Reed Financial, Inc. (NYSE:WDR). Fisher Asset Management had 97.7 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $51.6 million investment in the stock during the quarter. The other funds with brand new WDR positions are David Dreman’s Dreman Value Management, Ken Griffin’s Citadel Investment Group, and Mario Gabelli’s GAMCO Investors.
Insider trading activity in Waddell & Reed Financial, Inc. (NYSE:WDR)
Insider buying made by high-level executives is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the last 180-day time period, Waddell & Reed Financial, Inc. (NYSE:WDR) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Waddell & Reed Financial, Inc. (NYSE:WDR). These stocks are American Capital Ltd. (NASDAQ:ACAS), Lazard Ltd (NYSE:LAZ), Legg Mason, Inc. (NYSE:LM), Och-Ziff Capital Management Group LLC (NYSE:OZM), and KKR & Co. L.P. (NYSE:KKR). All of these stocks are in the asset management industry and their market caps resemble WDR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| American Capital Ltd. (NASDAQ:ACAS) | 25 | 0 | 0 |
| Lazard Ltd (NYSE:LAZ) | 12 | 0 | 0 |
| Legg Mason, Inc. (NYSE:LM) | 25 | 0 | 0 |
| Och-Ziff Capital Management Group LLC (NYSE:OZM) | 12 | 0 | 0 |
| KKR & Co. L.P. (NYSE:KKR) | 25 | 0 | 0 |
Using the results demonstrated by the previously mentioned tactics, regular investors must always watch hedge fund and insider trading activity, and Waddell & Reed Financial, Inc. (NYSE:WDR) shareholders fit into this picture quite nicely.
