Is Dun & Bradstreet Corp (NYSE:DNB) a buy here? Investors who are in the know are taking a bearish view. The number of long hedge fund bets were cut by 8 lately.
In the eyes of most shareholders, hedge funds are seen as unimportant, old financial vehicles of the past. While there are greater than 8000 funds trading today, we at Insider Monkey look at the aristocrats of this group, close to 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total capital, and by monitoring their top investments, we have figured out a few investment strategies that have historically outperformed the market. 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 began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Just as key, bullish insider trading sentiment is a second way to parse down the world of equities. Just as you’d expect, there are lots of stimuli for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if shareholders understand what to do (learn more here).
With all of this in mind, let’s take a peek at the latest action surrounding Dun & Bradstreet Corp (NYSE:DNB).
What does the smart money think about Dun & Bradstreet Corp (NYSE:DNB)?
In preparation for this year, a total of 12 of the hedge funds we track were long in this stock, a change of -40% from the third quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies we track, John Shapiro’s Chieftain Capital had the most valuable position in Dun & Bradstreet Corp (NYSE:DNB), worth close to $140 million, accounting for 11.1% of its total 13F portfolio. The second largest stake is held by John W. Rogers of Ariel Investments, with a $70 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’s AQR Capital Management and Charles Davidson’s Wexford Capital.
Since Dun & Bradstreet Corp (NYSE:DNB) has faced bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of fund managers who were dropping their positions entirely at the end of the year. It’s worth mentioning that James Dinan’s York Capital Management sold off the largest position of the 450+ funds we track, valued at close to $100 million in stock.. Jeffrey Tannenbaum’s fund, Fir Tree, also sold off its stock, about $52 million worth. These transactions are important to note, as total hedge fund interest was cut by 8 funds at the end of the year.
How are insiders trading Dun & Bradstreet Corp (NYSE:DNB)?
Insider buying is particularly usable when the company in question has seen transactions within the past six months. Over the last half-year time period, Dun & Bradstreet Corp (NYSE:DNB) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Dun & Bradstreet Corp (NYSE:DNB). These stocks are Morningstar, Inc. (NASDAQ:MORN), DST Systems, Inc. (NYSE:DST), Broadridge Financial Solutions, Inc. (NYSE:BR), FactSet Research Systems Inc. (NYSE:FDS), and DigitalGlobe Inc (NYSE:DGI). This group of stocks belong to the information & delivery services industry and their market caps are similar to DNB’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Morningstar, Inc. (NASDAQ:MORN)||8||0||10|
|DST Systems, Inc. (NYSE:DST)||20||1||7|
|Broadridge Financial Solutions, Inc. (NYSE:BR)||17||0||6|
|FactSet Research Systems Inc. (NYSE:FDS)||10||0||7|
|DigitalGlobe Inc (NYSE:DGI)||22||0||3|
With the results demonstrated by Insider Monkey’s studies, everyday investors must always monitor hedge fund and insider trading sentiment, and Dun & Bradstreet Corp (NYSE:DNB) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.