Deluxe Corporation (NYSE:DLX) investors should pay attention to a decrease in hedge fund interest of late.
In the eyes of most market participants, hedge funds are assumed to be slow, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey look at the elite of this group, about 450 funds. It is estimated that this group oversees most of the smart money’s total asset base, and by watching their best stock picks, we have revealed a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped 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 topped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as important, positive insider trading activity is a second way to parse down the stock market universe. As the old adage goes: there are lots of motivations for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).
Consequently, let’s take a look at the latest action surrounding Deluxe Corporation (NYSE:DLX).
What have hedge funds been doing with Deluxe Corporation (NYSE:DLX)?
At the end of the fourth quarter, a total of 8 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, McKinley Capital Management, managed by Robert B. Gillam, holds the most valuable position in Deluxe Corporation (NYSE:DLX). McKinley Capital Management has a $20.1 million position in the stock, comprising 1% of its 13F portfolio. Coming in second is Joel Greenblatt of Gotham Asset Management, with a $14.5 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Jim Simons’s Renaissance Technologies, Andy Redleaf’s Whitebox Advisors and Israel Englander’s Millennium Management.
Since Deluxe Corporation (NYSE:DLX) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few hedge funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors dropped the biggest position of the 450+ funds we monitor, comprising about $0.3 million in stock. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Deluxe Corporation (NYSE:DLX)?
Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time frame, Deluxe Corporation (NYSE:DLX) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Deluxe Corporation (NYSE:DLX). These stocks are HMS Holdings Corp. (NASDAQ:HMSY), Ritchie Bros. Auctioneers (USA) (NYSE:RBA), RR Donnelley & Sons Co (NASDAQ:RRD), Lender Processing Services, Inc. (NYSE:LPS), and Portfolio Recovery Associates, Inc. (NASDAQ:PRAA). All of these stocks are in the business services industry and their market caps resemble DLX’s market cap.