Is Facebook Inc (NASDAQ:FB) undervalued? Prominent investors are in a bullish mood. The number of long hedge fund positions inched up by 19 lately.
In the financial world, there are dozens of gauges investors can use to track publicly traded companies. Two of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite fund managers can outpace the market by a superb amount (see just how much).
Equally as beneficial, positive insider trading activity is another way to parse down the financial markets. There are lots of motivations for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this tactic if shareholders know where to look (learn more here).
Keeping this in mind, let’s take a glance at the key action surrounding Facebook Inc (NASDAQ:FB).
How are hedge funds trading Facebook Inc (NASDAQ:FB)?
Heading into 2013, a total of 67 of the hedge funds we track held long positions in this stock, a change of 40% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably.
When looking at the hedgies we track, Stephen Mandel’s Lone Pine Capital had the biggest position in Facebook Inc (NASDAQ:FB), worth close to $290.9 million, comprising 1.8% of its total 13F portfolio. Coming in second is Steven Cohen of SAC Capital Advisors, with a $226.2 million position; 1.1% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include D. E. Shaw’s D E Shaw, Jim Simons’s Renaissance Technologies and David Stemerman’s Conatus Capital Management.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Lone Pine Capital, managed by Stephen Mandel, created the biggest position in Facebook Inc (NASDAQ:FB). Lone Pine Capital had 290.9 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $149.2 million investment in the stock during the quarter. The other funds with brand new FB positions are David Stemerman’s Conatus Capital Management, Donald Chiboucis’s Columbus Circle Investors, and Leon Cooperman’s Omega Advisors.
Insider trading activity in Facebook Inc (NASDAQ:FB)
Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month 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 go over 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 belong to the internet information providers industry and their market caps resemble FB’s market cap.