Elizabeth Arden, Inc. (RDEN): Hedge Funds and Insiders Are Bearish, What Should You Do?

Is Elizabeth Arden, Inc. (NASDAQ:RDEN) a healthy stock for your portfolio? The smart money is in a pessimistic mood. The number of long hedge fund bets dropped by 3 recently.

According to most market participants, hedge funds are perceived as slow, old financial tools of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey choose to focus on the aristocrats of this club, about 450 funds. It is estimated that this group controls most of the hedge fund industry’s total capital, and by monitoring their best equity investments, we have discovered a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, bullish insider trading sentiment is a second way to break down the marketplace. Just as you’d expect, there are a number of stimuli for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if investors know what to do (learn more here).

With all of this in mind, we’re going to take a peek at the latest action surrounding Elizabeth Arden, Inc. (NASDAQ:RDEN).

How are hedge funds trading Elizabeth Arden, Inc. (NASDAQ:RDEN)?

At Q1’s end, a total of 9 of the hedge funds we track held long positions in this stock, a change of -25% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings substantially.

Elizabeth Arden, Inc. (NASDAQ:RDEN)When looking at the hedgies we track, Ken Fisher’s Fisher Asset Management had the biggest position in Elizabeth Arden, Inc. (NASDAQ:RDEN), worth close to $44.9 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Richard Driehaus’s Driehaus Capital, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.

Due to the fact that Elizabeth Arden, Inc. (NASDAQ:RDEN) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds that elected to cut their positions entirely in Q1. At the top of the heap, Donald Chiboucis’s Columbus Circle Investors sold off the biggest stake of the 450+ funds we watch, totaling close to $36.2 million in stock., and Alexander Mitchell of Scopus Asset Management was right behind this move, as the fund dropped about $13.8 million worth. These transactions are interesting, as total hedge fund interest fell by 3 funds in Q1.

What have insiders been doing with Elizabeth Arden, Inc. (NASDAQ:RDEN)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the last 180-day time period, Elizabeth Arden, Inc. (NASDAQ:RDEN) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Elizabeth Arden, Inc. (NASDAQ:RDEN). These stocks are Energizer Holdings, Inc. (NYSE:ENR), Blyth, Inc. (NYSE:BTH), Nu Skin Enterprises, Inc. (NYSE:NUS), Inter Parfums, Inc. (NASDAQ:IPAR), and Revlon Inc (NYSE:REV). This group of stocks are in the personal products industry and their market caps match RDEN’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Energizer Holdings, Inc. (NYSE:ENR) 21 0 7
Blyth, Inc. (NYSE:BTH) 15 1 0
Nu Skin Enterprises, Inc. (NYSE:NUS) 13 0 4
Inter Parfums, Inc. (NASDAQ:IPAR) 8 0 7
Revlon Inc (NYSE:REV) 8 0 0

With the returns demonstrated by the aforementioned strategies, retail investors should always monitor hedge fund and insider trading activity, and Elizabeth Arden, Inc. (NASDAQ:RDEN) applies perfectly to this mantra.

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