Federated Investors Inc (NYSE:FII) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. FII investors should be aware of a decrease in hedge fund sentiment recently. There were 24 hedge funds in our database with FII positions at the end of the previous quarter.
According to most stock holders, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are over 8000 funds trading at the moment, we choose to focus on the upper echelon of this club, close to 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total asset base, and by watching their top investments, we have come up with a few investment strategies that have historically outstripped Mr. Market. 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 started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as integral, optimistic insider trading sentiment is a second way to break down the world of equities. As the old adage goes: there are a number of stimuli for an executive to drop shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this strategy if “monkeys” know what to do (learn more here).
Now, it’s important to take a glance at the recent action encompassing Federated Investors Inc (NYSE:FII).
How are hedge funds trading Federated Investors Inc (NYSE:FII)?
At the end of the first quarter, a total of 15 of the hedge funds we track were long in this stock, a change of -38% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully.
Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in Federated Investors Inc (NYSE:FII), worth close to $346.5 million, accounting for 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Tom Gayner of Markel Gayner Asset Management, with a $51 million position; 1.9% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, David Dreman’s Dreman Value Management and Jim Simons’s Renaissance Technologies.
Since Federated Investors Inc (NYSE:FII) has faced a declination in interest from the smart money, logic holds that there exists a select few fund managers that slashed their entire stakes at the end of the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest stake of all the hedgies we monitor, comprising an estimated $25 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also dumped its stock, about $7.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 9 funds at the end of the first quarter.
How have insiders been trading Federated Investors Inc (NYSE:FII)?
Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past half-year. Over the latest six-month time frame, Federated Investors Inc (NYSE:FII) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Federated Investors Inc (NYSE:FII). These stocks are Waddell & Reed Financial, Inc. (NYSE:WDR), Financial Engines Inc (NASDAQ:FNGN), Janus Capital Group Inc (NYSE:JNS), Fortress Investment Group LLC (NYSE:FIG), and AllianceBernstein Holding LP (NYSE:AB). This group of stocks are the members of the asset management industry and their market caps are closest to FII’s market cap.