Electronic Arts Inc. (NASDAQ:EA) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately.
To most stock holders, hedge funds are viewed as slow, outdated financial tools of the past. While there are more than 8000 funds trading today, we at Insider Monkey hone in on the bigwigs of this club, close to 450 funds. It is widely believed that this group oversees the majority of the smart money’s total capital, and by tracking their highest performing investments, we have come up with a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as key, optimistic insider trading activity is another way to break down the investments you’re interested in. Just as you’d expect, there are plenty of reasons for an executive to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if shareholders understand where to look (learn more here).
With all of this in mind, let’s take a look at the key action regarding Electronic Arts Inc. (NASDAQ:EA).
Hedge fund activity in Electronic Arts Inc. (NASDAQ:EA)
At the end of the fourth quarter, a total of 24 of the hedge funds we track were long in this stock, a change of -14% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully.
According to our comprehensive database, Larry Robbins’s Glenview Capital had the largest position in Electronic Arts Inc. (NASDAQ:EA), worth close to $117.7 million, comprising 1.7% of its total 13F portfolio. On Glenview Capital’s heels is Kerr Neilson of Platinum Asset Management, with a $75.7 million position; 1.7% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Michael Kaufman’s MAK Capital One, Dan Loeb’s Third Point and D. E. Shaw’s D E Shaw.
Because Electronic Arts Inc. (NASDAQ:EA) has experienced a declination in interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers who were dropping their full holdings heading into 2013. At the top of the heap, Jim Simons’s Renaissance Technologies dropped the biggest stake of the 450+ funds we watch, worth close to $34.7 million in stock., and Ray Dalio of Bridgewater Associates was right behind this move, as the fund cut about $14.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds heading into 2013.
Insider trading activity in Electronic Arts Inc. (NASDAQ:EA)
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Electronic Arts Inc. (NASDAQ:EA) has experienced 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Electronic Arts Inc. (NASDAQ:EA). These stocks are Cornerstone OnDemand, Inc. (NASDAQ:CSOD), Activision Blizzard, Inc. (NASDAQ:ATVI), Rovi Corporation (NASDAQ:ROVI), Konami Corp (ADR) (NYSE:KNM), and International Game Technology (NYSE:IGT). This group of stocks are in the multimedia & graphics software industry and their market caps are similar to EA’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Cornerstone OnDemand, Inc. (NASDAQ:CSOD)||10||0||10|
|Activision Blizzard, Inc. (NASDAQ:ATVI)||25||0||1|
|Rovi Corporation (NASDAQ:ROVI)||15||0||2|
|Konami Corp (ADR) (NYSE:KNM)||1||0||0|
|International Game Technology (NYSE:IGT)||28||2||0|
With the returns exhibited by our tactics, retail investors must always monitor hedge fund and insider trading sentiment, and Electronic Arts Inc. (NASDAQ:EA) is no exception.