Is Financial Engines Inc (NASDAQ:FNGN) a buy right now? The smart money is in an optimistic mood. The number of bullish hedge fund bets rose by 1 in recent months.
In the eyes of most shareholders, hedge funds are seen as unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, we at Insider Monkey choose to focus on the crème de la crème of this group, around 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total capital, and by tracking their highest performing stock picks, we have unsheathed a number of investment strategies that have historically outperformed the S&P 500 index. 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 began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as integral, optimistic insider trading activity is another way to break down the marketplace. Just as you’d expect, there are a variety of incentives for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the useful potential of this strategy if you know where to look (learn more here).
Consequently, it’s important to take a peek at the latest action regarding Financial Engines Inc (NASDAQ:FNGN).
What have hedge funds been doing with Financial Engines Inc (NASDAQ:FNGN)?
At Q1’s end, a total of 6 of the hedge funds we track were bullish in this stock, a change of 20% from the first quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably.
According to our comprehensive database, Drew Cupps’s Cupps Capital Management had the largest position in Financial Engines Inc (NASDAQ:FNGN), worth close to $23.3 million, comprising 2.3% of its total 13F portfolio. The second largest stake is held by D E Shaw, managed by D. E. Shaw, which held a $4.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish include Chuck Royce’s Royce & Associates, Mike Vranos’s Ellington and Cliff Asness’s AQR Capital Management.
Now, key hedge funds have been driving this bullishness. D E Shaw, managed by D. E. Shaw, initiated the most outsized position in Financial Engines Inc (NASDAQ:FNGN). D E Shaw had 4.1 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.3 million position during the quarter.
How have insiders been trading Financial Engines Inc (NASDAQ:FNGN)?
Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time frame, Financial Engines Inc (NASDAQ:FNGN) has seen zero unique insiders buying, and 13 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Financial Engines Inc (NASDAQ:FNGN). These stocks are WisdomTree Investments, Inc. (NASDAQ:WETF), Gamco Investors Inc. (NYSE:GBL), Virtus Investment Partners Inc (NASDAQ:VRTS), Cohen & Steers, Inc. (NYSE:CNS), and Janus Capital Group Inc (NYSE:JNS). This group of stocks belong to the asset management industry and their market caps are similar to FNGN’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|WisdomTree Investments, Inc. (NASDAQ:WETF)||17||0||11|
|Gamco Investors Inc. (NYSE:GBL)||6||1||1|
|Virtus Investment Partners Inc (NASDAQ:VRTS)||12||0||5|
|Cohen & Steers, Inc. (NYSE:CNS)||6||0||4|
|Janus Capital Group Inc (NYSE:JNS)||12||1||5|
With the results shown by our time-tested strategies, retail investors should always watch hedge fund and insider trading sentiment, and Financial Engines Inc (NASDAQ:FNGN) is an important part of this process.