In the eyes of many of your peers, hedge funds are viewed as overrated, outdated financial vehicles of an era lost to time. Although there are over 8,000 hedge funds in operation currently, this site looks at the top tier of this group, close to 525 funds. It is widely held that this group has its hands on the majority of the smart money's total assets, and by keeping an eye on their highest quality equity investments, we've uncovered a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped 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 trumped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as key, bullish insider trading activity is a second way to analyze the financial markets. There are plenty of stimuli for a corporate insider to drop shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the impressive potential of this tactic if shareholders know where to look (learn more here).
Furthermore, it's important to examine the latest info surrounding Emeritus Corporation (NYSE:ESC).
At the end of the second quarter, a total of 22 of the hedge funds we track held long positions in this stock, a change of -27% from one quarter earlier. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes substantially.
When using filings from the hedgies we track, Long Pond Capital, managed by John Khoury, holds the biggest position in Emeritus Corporation (NYSE:ESC). Long Pond Capital has a $41.5 million position in the stock, comprising 7.3% of its 13F portfolio. Coming in second is Clint Carlson of Carlson Capital, with a $25.8 million position; 0.3% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Phill Gross and Robert Atchinson's Adage Capital Management, Ken Griffin's Citadel Investment Group and Jim Simons's Renaissance Technologies.
Since Emeritus Corporation (NYSE:ESC) has experienced declining interest from the entirety of the hedge funds we track, it's easy to see that there were a few funds that slashed their full holdings heading into Q2. Interestingly, SAC Subsidiary's CR Intrinsic Investors cut the largest stake of the "upper crust" of funds we monitor, worth about $7.6 million in stock. Alec Litowitz and Ross Laser's fund, Magnetar Capital, also sold off its stock, about $4.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 8 funds heading into Q2.
Bullish insider trading is particularly usable when the company we're looking at has experienced transactions within the past six months. Over the latest six-month time frame, Emeritus Corporation (NYSE:ESC) 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 Emeritus Corporation (NYSE:ESC). These stocks are Brookdale Senior Living, Inc. (NYSE:BKD), Kindred Healthcare, Inc. (NYSE:KND), National HealthCare Corporation (NYSEAMEX:NHC), The Ensign Group, Inc. (NASDAQ:ENSG), and Capital Senior Living Corporation (NYSE:CSU). This group of stocks are the members of the long-term care facilities industry and their market caps match ESC's market cap.