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Hedge Funds Are Betting On KAR Auction Services Inc (KAR)

KAR Auction Services Inc (NYSE:KAR) was in 24 hedge funds’ portfolio at the end of March. KAR has seen an increase in support from the world’s most elite money managers in recent months. There were 15 hedge funds in our database with KAR holdings at the end of the previous quarter.

In today’s marketplace, there are tons of methods shareholders can use to track their holdings. Two of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best investment managers can beat the S&P 500 by a significant amount (see just how much).

KAR Auction Services Inc (NYSE:KAR)Equally as integral, optimistic insider trading sentiment is a second way to break down the financial markets. As the old adage goes: there are lots of motivations for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this tactic if “monkeys” understand where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the key action regarding KAR Auction Services Inc (NYSE:KAR).

How have hedgies been trading KAR Auction Services Inc (NYSE:KAR)?

Heading into Q2, a total of 24 of the hedge funds we track were bullish in this stock, a change of 60% from the first quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably.

According to our comprehensive database, Ken Griffin’s Citadel Investment Group had the most valuable position in KAR Auction Services Inc (NYSE:KAR), worth close to $51.6 million, comprising 0.1% of its total 13F portfolio. On Citadel Investment Group’s heels is Amy Minella of Cardinal Capital, with a $47.5 million position; 3% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Jay Petschek and Steven Major’s Corsair Capital Management, Tom Sandell’s Sandell Asset Management and D. E. Shaw’s D E Shaw.

With a general bullishness amongst the heavyweights, key money managers have jumped into KAR Auction Services Inc (NYSE:KAR) headfirst. Sandell Asset Management, managed by Tom Sandell, created the largest position in KAR Auction Services Inc (NYSE:KAR). Sandell Asset Management had 30.1 million invested in the company at the end of the quarter. Bart Baum’s Ionic Capital Management also initiated a $6 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

What do corporate executives and insiders think about KAR Auction Services Inc (NYSE:KAR)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest half-year time frame, KAR Auction Services Inc (NYSE:KAR) has experienced zero unique insiders purchasing, and 17 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to KAR Auction Services Inc (NYSE:KAR). These stocks are Group 1 Automotive, Inc. (NYSE:GPI), Sonic Automotive Inc (NYSE:SAH), AutoNation, Inc. (NYSE:AN), Copart, Inc. (NASDAQ:CPRT), and Penske Automotive Group, Inc. (NYSE:PAG). All of these stocks are in the auto dealerships industry and their market caps resemble KAR’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Group 1 Automotive, Inc. (NYSE:GPI) 20 0 4
Sonic Automotive Inc (NYSE:SAH) 12 0 3
AutoNation, Inc. (NYSE:AN) 20 0 7
Copart, Inc. (NASDAQ:CPRT) 37 0 11
Penske Automotive Group, Inc. (NYSE:PAG) 15 0 0

With the results exhibited by the aforementioned tactics, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and KAR Auction Services Inc (NYSE:KAR) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds

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