According to most shareholders, hedge funds are seen as slow, old financial vehicles of the past. While there are over 8000 funds trading at present, we at Insider Monkey hone in on the bigwigs of this group, about 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total capital, and by watching their best investments, we have deciphered a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat 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 trumped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as key, positive insider trading sentiment is a second way to break down the stock market universe. Obviously, there are many incentives for a bullish insider to sell shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if you understand what to do (learn more here).
Now, it’s important to take a gander at the recent action encompassing Facebook Inc (NASDAQ:FB).
How are hedge funds trading Facebook Inc (NASDAQ:FB)?
At quarter’s end, a total of 49 of the hedge funds we track were long in this stock, a change of -36% from the fourth quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully.
Of the funds we track, D. E. Shaw’s D E Shaw had the biggest position in Facebook Inc (NASDAQ:FB), worth close to $194.5 million, accounting for 0.5% of its total 13F portfolio. Coming in second is Donald Chiboucis of Columbus Circle Investors, with a $154.6 million position; 1.2% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Jim Simons’s Renaissance Technologies, Leon Cooperman’s Omega Advisors and Patrick McCormack’s Tiger Consumer Management.
Because Facebook Inc (NASDAQ:FB) has faced a declination in interest from hedge fund managers, it’s easy to see that there exists a select few money managers that elected to cut their full holdings heading into Q2. It’s worth mentioning that Stephen Mandel’s Lone Pine Capital sold off the largest position of all the hedgies we watch, valued at an estimated $290.9 million in stock.. David Stemerman’s fund, Conatus Capital Management, also cut its stock, about $137.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 27 funds heading into Q2.
What do corporate executives and insiders think about Facebook Inc (NASDAQ:FB)?
Insider purchases made by high-level executives is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the last half-year time frame, Facebook Inc (NASDAQ:FB) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Facebook Inc (NASDAQ:FB). These stocks are Yandex NV (NASDAQ:YNDX), Google Inc (NASDAQ:GOOG), LinkedIn Corp (NYSE:LNKD), Yahoo! Inc. (NASDAQ:YHOO), and Baidu.com, Inc. (ADR) (NASDAQ:BIDU). This group of stocks are in the internet information providers industry and their market caps resemble FB’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Yandex NV (NASDAQ:YNDX) | 23 | 0 | 0 |
| Google Inc (NASDAQ:GOOG) | 148 | 0 | 11 |
| LinkedIn Corp (NYSE:LNKD) | 40 | 0 | 13 |
| Yahoo! Inc. (NASDAQ:YHOO) | 66 | 0 | 3 |
| Baidu.com, Inc. (ADR) (NASDAQ:BIDU) | 29 | 0 | 0 |
With the returns shown by the aforementioned tactics, everyday investors should always monitor hedge fund and insider trading sentiment, and Facebook Inc (NASDAQ:FB) is no exception.
