Now, according to many of your fellow readers, hedge funds are viewed as overrated, old investment vehicles of a forgotten age. Although there are In excess of 8,000 hedge funds in operation currently, Insider Monkey focuses on the leaders of this club, around 525 funds. It is widely held that this group has its hands on the lion's share of all hedge funds' total assets, and by tracking their highest quality picks, we've come up with a few 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 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 topped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Equally as crucial, positive insider trading sentiment is another way to analyze the investments you're interested in. Obviously, there are plenty of incentives for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this tactic if investors understand where to look (learn more here).
Furthermore, we're going to discuss the recent info surrounding Resources Connection, Inc. (NASDAQ:RECN).
Heading into Q3, a total of 10 of the hedge funds we track held long positions in this stock, a change of 0% from the first quarter. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.
Out of the hedge funds we follow, Royce & Associates, managed by Chuck Royce, holds the biggest position in Resources Connection, Inc. (NASDAQ:RECN). Royce & Associates has a $11.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates's heels is AQR Capital Management, managed by Cliff Asness, which held a $6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Ken Griffin's Citadel Investment Group, Joel Greenblatt's Gotham Asset Management and D. E. Shaw's D E Shaw.
Judging by the fact that Resources Connection, Inc. (NASDAQ:RECN) has witnessed a fall in interest from the top-tier hedge fund industry, logic holds that there was a specific group of fund managers that decided to sell off their positions entirely heading into Q2. Intriguingly, Peter Rathjens Bruce Clarke and John Campbell's Arrowstreet Capital dumped the biggest investment of the 450+ funds we key on, worth close to $0.4 million in stock. Ken Gray and Steve Walsh's fund, Bryn Mawr Capital, also dropped its stock, about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying made by high-level executives is most useful when the company in focus has experienced transactions within the past half-year. Over the latest six-month time frame, Resources Connection, Inc. (NASDAQ:RECN) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also review the relationship between both of these indicators in other stocks similar to Resources Connection, Inc. (NASDAQ:RECN). These stocks are Wageworks Inc (NYSE:WAGE), Exponent, Inc. (NASDAQ:EXPO), Navigant Consulting, Inc. (NYSE:NCI), Standard Parking Corporation (NASDAQ:STAN), and ICF International Inc (NASDAQ:ICFI). This group of stocks are the members of the management services industry and their market caps resemble RECN's market cap.