At the moment, there are tons of gauges market participants can use to analyze Mr. Market. A pair of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best fund managers can outclass their index-focused peers by a very impressive margin (see just how much).
Just as important, positive insider trading activity is a second way to break down the world of equities. Just as you’d expect, there are lots of incentives for an insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if “monkeys” know where to look (learn more here).
Consequently, it’s important to take a look at the key action encompassing Fred’s, Inc. (NASDAQ:FRED).
Hedge fund activity in Fred’s, Inc. (NASDAQ:FRED)
In preparation for this quarter, a total of 6 of the hedge funds we track were bullish in this stock, a change of 50% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially.
According to our comprehensive database, Cliff Asness’s AQR Capital Management had the most valuable position in Fred’s, Inc. (NASDAQ:FRED), worth close to $11.8 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons, which held a $0.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Joel Greenblatt’s Gotham Asset Management, D. E. Shaw’s D E Shaw and Michael Doheny’s Freshford Capital Management.
As aggregate interest increased, key money managers were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, established the biggest position in Fred’s, Inc. (NASDAQ:FRED). Gotham Asset Management had 0.5 million invested in the company at the end of the quarter. Michael Doheny’s Freshford Capital Management also initiated a $0.2 million position during the quarter.
How are insiders trading Fred’s, Inc. (NASDAQ:FRED)?
Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the last six-month time frame, Fred’s, Inc. (NASDAQ:FRED) has experienced zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Fred’s, Inc. (NASDAQ:FRED). These stocks are Alco Stores Inc (NASDAQ:ALCS), Family Dollar Stores, Inc. (NYSE:FDO), PriceSmart, Inc. (NASDAQ:PSMT), Big Lots, Inc. (NYSE:BIG), and Tuesday Morning Corporation (NASDAQ:TUES). All of these stocks are in the discount, variety stores industry and their market caps resemble FRED’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Alco Stores Inc (NASDAQ:ALCS) | 0 | 1 | |
| Family Dollar Stores, Inc. (NYSE:FDO) | 27 | 0 | 3 |
| PriceSmart, Inc. (NASDAQ:PSMT) | 7 | 0 | 7 |
| Big Lots, Inc. (NYSE:BIG) | 22 | 0 | 0 |
| Tuesday Morning Corporation (NASDAQ:TUES) | 13 | 4 | 0 |
With the returns shown by the aforementioned strategies, everyday investors should always watch hedge fund and insider trading sentiment, and Fred’s, Inc. (NASDAQ:FRED) applies perfectly to this mantra.
