What Would a Smart Herbalife Ltd. (HLF) Investor Do?

Herbalife Ltd. (NYSE:HLF) has seen a decrease in enthusiasm from smart money of late.

If you’d ask most market participants, hedge funds are assumed to be slow, outdated financial tools of the past. While there are greater than 8000 funds trading today, we at Insider Monkey hone in on the moguls of this club, around 450 funds. It is estimated that this group oversees the lion’s share of the hedge fund industry’s total capital, and by tracking their best equity investments, we have formulated a few investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as key, optimistic insider trading activity is a second way to parse down the marketplace. Just as you’d expect, there are a number of incentives for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if investors know what to do (learn more here).

With these “truths” under our belt, we’re going to take a look at the recent action encompassing Herbalife Ltd. (NYSE:HLF).

What does the smart money think about Herbalife Ltd. (NYSE:HLF)?

At the end of the first quarter, a total of 30 of the hedge funds we track held long positions in this stock, a change of -19% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings substantially.

Herbalife Ltd. (NYSE:HLF)According to our comprehensive database, Icahn Capital LP, managed by Carl Icahn, holds the most valuable position in Herbalife Ltd. (NYSE:HLF). Icahn Capital LP has a $612.5 million position in the stock, comprising 3.6% of its 13F portfolio. On Icahn Capital LP’s heels is Steven Richman of East Side Capital (RR Partners), with a $113.1 million position; 5.7% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Patrick McCormack’s Tiger Consumer Management, D. E. Shaw’s D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Due to the fact that Herbalife Ltd. (NYSE:HLF) has experienced bearish sentiment from the smart money, we can see that there were a few hedge funds that elected to cut their entire stakes last quarter. Intriguingly, Ken Heebner’s Capital Growth Management dumped the largest position of all the hedgies we key on, worth an estimated $110.2 million in stock., and Dan Loeb of Third Point was right behind this move, as the fund sold off about $102.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 7 funds last quarter.

How have insiders been trading Herbalife Ltd. (NYSE:HLF)?

Bullish insider trading is at its handiest when the company in focus has seen transactions within the past half-year. Over the last six-month time frame, Herbalife Ltd. (NYSE:HLF) has experienced 1 unique insiders buying, and 0 insider sales (see the details of insider trades here).

With the returns shown by Insider Monkey’s time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Herbalife Ltd. (NYSE:HLF) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!