Service Corporation International (NYSE:SCI) has experienced an increase in activity from the world’s largest hedge funds in recent months.
According to most stock holders, hedge funds are assumed to be underperforming, old financial tools of the past. While there are more than 8000 funds trading at present, we hone in on the elite of this group, around 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total capital, and by monitoring their highest performing equity investments, we have revealed a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as important, optimistic insider trading activity is another way to break down the world of equities. Obviously, there are many stimuli for an insider to cut 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 method if piggybackers understand where to look (learn more here).
With all of this in mind, it’s important to take a peek at the recent action encompassing Service Corporation International (NYSE:SCI).
Hedge fund activity in Service Corporation International (NYSE:SCI)
At the end of the fourth quarter, a total of 18 of the hedge funds we track held long positions in this stock, a change of 64% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings substantially.
Of the funds we track, Mason Hawkins’s Southeastern Asset Management had the most valuable position in Service Corporation International (NYSE:SCI), worth close to $339 million, comprising 1.5% of its total 13F portfolio. Sitting at the No. 2 spot is David Cohen and Harold Levy of Iridian Asset Management, with a $77 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Jane Mendillo’s Harvard Management Co.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. CR Intrinsic Investors, managed by SAC Subsidiary, created the most outsized position in Service Corporation International (NYSE:SCI). CR Intrinsic Investors had 7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $3 million investment in the stock during the quarter. The other funds with brand new SCI positions are John Overdeck and David Siegel’s Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Mike Vranos’s Ellington.
How have insiders been trading Service Corporation International (NYSE:SCI)?
Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time period, Service Corporation International (NYSE:SCI) has experienced 1 unique insiders buying, and 4 insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey’s research, retail investors should always pay attention to hedge fund and insider trading sentiment, and Service Corporation International (NYSE:SCI) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.