DST Systems, Inc. (NYSE:DST) was in 20 hedge funds’ portfolio at the end of the fourth quarter of 2012. DST investors should be aware of an increase in hedge fund sentiment lately. There were 19 hedge funds in our database with DST holdings at the end of the previous quarter.
If you’d ask most shareholders, hedge funds are viewed as unimportant, old financial tools of the past. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the top tier of this group, around 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total capital, and by paying attention to their best stock picks, we have identified a few investment strategies that have historically outpaced the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as key, bullish insider trading activity is a second way to break down the marketplace. Obviously, there are many motivations for an executive to get rid of shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this tactic if shareholders know where to look (learn more here).
Consequently, let’s take a look at the recent action regarding DST Systems, Inc. (NYSE:DST).
What does the smart money think about DST Systems, Inc. (NYSE:DST)?
Heading into 2013, a total of 20 of the hedge funds we track held long positions in this stock, a change of 5% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly.
Of the funds we track, Greenlight Capital, managed by David Einhorn, holds the most valuable position in DST Systems, Inc. (NYSE:DST). Greenlight Capital has a $136 million position in the stock, comprising 2.1% of its 13F portfolio. On Greenlight Capital’s heels is Dreman Value Management, managed by David Dreman, which held a $39 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Matt Sirovich and Jeremy Mindich’s Scopia Capital, Daniel Gold’s QVT Financial and Israel Englander’s Millennium Management.
Now, key money managers were leading the bulls’ herd. Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, created the largest position in DST Systems, Inc. (NYSE:DST). Scopia Capital had 35 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also made a $7 million investment in the stock during the quarter. The following funds were also among the new DST investors: Mark A. Nordlicht’s Platinum Management, Phil Frohlich’s Prescott Group Capital Management, and Mike Vranos’s Ellington.
What have insiders been doing with DST Systems, Inc. (NYSE:DST)?
Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the last half-year time period, DST Systems, Inc. (NYSE:DST) has experienced 1 unique insiders buying, and 6 insider sales (see the details of insider trades here).
With the returns exhibited by Insider Monkey’s tactics, retail investors must always pay attention to hedge fund and insider trading activity, and DST Systems, Inc. (NYSE:DST) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.