Do Hedge Funds and Insiders Love Facebook Inc (FB)?

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Facebook Inc (NASDAQ:FB) was in 49 hedge funds’ portfolio at the end of March. FB shareholders have witnessed a decrease in hedge fund sentiment recently. There were 76 hedge funds in our database with FB positions at the end of the previous quarter.

According to most traders, hedge funds are perceived as slow, outdated investment tools of yesteryear. While there are more than 8000 funds trading at present, we at Insider Monkey look at the masters of this club, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of the hedge fund industry’s total capital, and by monitoring their best equity investments, we have spotted a number of investment strategies that have historically beaten 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 started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Facebook Inc. (FB)

Equally as integral, positive insider trading activity is a second way to parse down the stock market universe. Just as you’d expect, there are many motivations for an executive to drop shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this method if piggybackers know where to look (learn more here).

With all of this in mind, let’s take a peek at the latest action surrounding Facebook Inc (NASDAQ:FB).

What have hedge funds been doing with Facebook Inc (NASDAQ:FB)?

Heading into Q2, a total of 49 of the hedge funds we track were bullish in this stock, a change of -36% from the first quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably.

Of the funds we track, D E Shaw, managed by D. E. Shaw, holds the largest position in Facebook Inc (NASDAQ:FB). D E Shaw has a $194.5 million position in the stock, comprising 0.5% of its 13F portfolio. On D E Shaw’s heels is Donald Chiboucis of Columbus Circle Investors, with a $154.6 million position; 1.2% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Jim Simons’s Renaissance Technologies, Leon Cooperman’s Omega Advisors and Patrick McCormack’s Tiger Consumer Management.

Since Facebook Inc (NASDAQ:FB) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there were a few funds who were dropping their full holdings last quarter. Intriguingly, Stephen Mandel’s Lone Pine Capital cut the largest stake of the 450+ funds we watch, worth close to $290.9 million in stock., and David Stemerman of Conatus Capital Management was right behind this move, as the fund dumped about $137.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 27 funds last quarter.

Insider trading activity in Facebook Inc (NASDAQ:FB)

Insider purchases made by high-level executives is particularly usable when the company in focus has experienced transactions within the past six months. Over the last 180-day time period, Facebook Inc (NASDAQ:FB) has seen zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Facebook Inc (NASDAQ:FB). These stocks are Yandex NV (NASDAQ:YNDX), Google Inc (NASDAQ:GOOG), LinkedIn Corp (NYSE:LNKD), Yahoo! Inc. (NASDAQ:YHOO), and, Inc. (ADR) (NASDAQ:BIDU). This group of stocks are in the internet information providers industry and their market caps resemble FB’s market cap.

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