Is General Cable Corporation (NYSE:BGC) undervalued? Hedge funds are getting more optimistic. The number of long hedge fund bets inched up by 1 in recent months.
In the eyes of most investors, hedge funds are perceived as underperforming, outdated financial vehicles of the past. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the crème de la crème of this club, around 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by monitoring their best picks, we have spotted a few investment strategies that have historically outpaced the 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 started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as important, bullish insider trading sentiment is another way to break down the marketplace. Just as you’d expect, there are a number of motivations for an insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this tactic if you understand where to look (learn more here).
Keeping this in mind, it’s important to take a gander at the recent action regarding General Cable Corporation (NYSE:BGC).
How have hedgies been trading General Cable Corporation (NYSE:BGC)?
At year’s end, a total of 20 of the hedge funds we track held long positions in this stock, a change of 5% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably.
Of the funds we track, Eric Bannasch’s Cadian Capital had the most valuable position in General Cable Corporation (NYSE:BGC), worth close to $150 million, accounting for 4.9% of its total 13F portfolio. Coming in second is Dreman Value Management, managed by David Dreman, which held a $36 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Cliff Asness’s AQR Capital Management, Matthew Lindenbaum’s Basswood Capital and Paul Tudor Jones’s Tudor Investment Corp.
As one would reasonably expect, some big names have been driving this bullishness. Newland Capital, managed by Ken Brodkowitz and Mike Vermut, assembled the largest position in General Cable Corporation (NYSE:BGC). Newland Capital had 1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1 million investment in the stock during the quarter. The following funds were also among the new bgc investors: Michael Hintze’s CQS Cayman LP, David Costen Haley’s HBK Investments, and Ken Gray and Steve Walsh’s Bryn Mawr Capital.
What have insiders been doing with General Cable Corporation (NYSE:BGC)?
Insider buying is best served when the company in question has seen transactions within the past 180 days. Over the latest six-month time frame, General Cable Corporation (NYSE:BGC) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the returns shown by the aforementioned tactics, everyday investors should always keep an eye on hedge fund and insider trading activity, and General Cable Corporation (NYSE:BGC) applies perfectly to this mantra.
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