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Walgreen Company (NYSE:WAG): Are Hedge Funds Right About This Stock?

Is Walgreen Company (NYSE:WAG) ready to raly soon? Prominent investors are getting more optimistic. The number of bullish hedge fund positions increased by 1 lately.

WALGREEN CO (NYSE:WAG)

In the eyes of most market participants, hedge funds are perceived as unimportant, 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 aristocrats of this club, about 450 funds. Most estimates calculate that this group controls the majority of all hedge funds’ total asset base, and by tracking their top investments, we have uncovered a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as integral, bullish insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are many incentives for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this tactic if investors know where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the latest action surrounding Walgreen Company (NYSE:WAG).

What does the smart money think about Walgreen Company (NYSE:WAG)?

In preparation for this year, a total of 50 of the hedge funds we track held long positions in this stock, a change of 2% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly.

When looking at the hedgies we track, William B. Gray’s Orbis Investment Management had the most valuable position in Walgreen Company (NYSE:WAG), worth close to $260 million billion, accounting for 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $84 million position; 1.5% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Tom Gayner’s Markel Gayner Asset Management, Michael Messner’s Seminole Capital (Investment Mgmt) and Steven Cohen’s SAC Capital Advisors.

As one would reasonably expect, some big names were leading the bulls’ herd. Scopus Asset Management, managed by Alexander Mitchell, initiated the biggest position in Walgreen Company (NYSE:WAG). Scopus Asset Management had 43 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $23 million investment in the stock during the quarter. The other funds with new positions in the stock are Boaz Weinstein’s Saba Capital, , and .

What have insiders been doing with Walgreen Company (NYSE:WAG)?

Insider purchases made by high-level executives is at its handiest when the company in question has experienced transactions within the past six months. Over the last half-year time period, Walgreen Company (NYSE:WAG) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Walgreen Company (NYSE:WAG) is an important part of this process.

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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