Is Sothebys (NYSE:BID) a buy right now? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund bets advanced by 9 recently.
If you’d ask most investors, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, we look at the upper echelon of this club, close to 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total asset base, and by monitoring their highest performing picks, we have identified a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 23.3 percentage points in 8 months (see the details here).
Equally as integral, optimistic insider trading activity is another way to parse down the financial markets. There are many motivations for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).
Now, it’s important to take a gander at the latest action encompassing Sothebys (NYSE:BID).
What have hedge funds been doing with Sothebys (NYSE:BID)?
At Q1’s end, a total of 25 of the hedge funds we track were bullish in this stock, a change of 56% from the first quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly.
When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the biggest position in Sothebys (NYSE:BID), worth close to $151.5 million, comprising 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Ariel Investments, managed by John W. Rogers, which held a $88.9 million position; 1.5% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Ken Fisher’s Fisher Asset Management, Mariko Gordon’s Daruma Asset Management and Kerr Neilson’s Platinum Asset Management.
As one would reasonably expect, key money managers have jumped into Sothebys (NYSE:BID) headfirst. Scopus Asset Management, managed by Alexander Mitchell, assembled the biggest position in Sothebys (NYSE:BID). Scopus Asset Management had 20.5 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also made a $18.7 million investment in the stock during the quarter. The other funds with brand new BID positions are Andrew Sandler’s Sandler Capital Management, Andrew Sandler’s Sandler Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
How are insiders trading Sothebys (NYSE:BID)?
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, Sothebys (NYSE:BID) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Sothebys (NYSE:BID). These stocks are Francesca’s Holdings Corp (NASDAQ:FRAN), Vitamin Shoppe Inc (NYSE:VSI), Coinstar, Inc. (NASDAQ:CSTR), Five Below Inc (NASDAQ:FIVE), and HSN, Inc. (NASDAQ:HSNI). This group of stocks belong to the specialty retail, other industry and their market caps are similar to BID’s market cap.