CapLease, Inc. (LSE): Insiders Are Buying, Should You?

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CapLease, Inc. (NYSE:LSE) has seen an increase in hedge fund interest of late.

To most stock holders, hedge funds are seen as slow, old investment tools of years past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey look at the elite of this group, around 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total asset base, and by tracking their best stock picks, we have brought to light a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 23.3 percentage points in 8 months (check out a sample of our picks).

David Dreman

Equally as key, optimistic insider trading sentiment is a second way to parse down the investments you’re interested in. Obviously, there are many motivations for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this strategy if piggybackers understand what to do (learn more here).

With all of this in mind, let’s take a glance at the recent action encompassing CapLease, Inc. (NYSE:LSE).

How have hedgies been trading CapLease, Inc. (NYSE:LSE)?

At the end of the first quarter, a total of 10 of the hedge funds we track were long in this stock, a change of 43% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially.

When looking at the hedgies we track, Dreman Value Management, managed by David Dreman, holds the most valuable position in CapLease, Inc. (NYSE:LSE). Dreman Value Management has a $9.2 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $6.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish include Dmitry Balyasny’s Balyasny Asset Management, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

Consequently, key hedge funds were breaking ground themselves. Dreman Value Management, managed by David Dreman, established the largest position in CapLease, Inc. (NYSE:LSE). Dreman Value Management had 9.2 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $2.9 million position during the quarter. The other funds with new positions in the stock are Robert B. Gillam’s McKinley Capital Management and Matthew Tewksbury’s Stevens Capital Management.

How are insiders trading CapLease, Inc. (NYSE:LSE)?

Bullish insider trading is at its handiest when the company in question has seen transactions within the past six months. Over the last half-year time frame, CapLease, Inc. (NYSE:LSE) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to CapLease, Inc. (NYSE:LSE). These stocks are Hudson Pacific Properties Inc (NYSE:HPP), Franklin Street Properties Corp. (NYSEAMEX:FSP), Select Income REIT (NYSE:SIR), First Potomac Realty Trust (NYSE:FPO), and CoreSite Realty Corp (NYSE:COR). All of these stocks are in the reit – office industry and their market caps match LSE’s market cap.

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