Is Legg Mason, Inc. (NYSE:LM) a good investment?
In the financial world, there are tons of methods market participants can use to watch publicly traded companies. Two of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can outpace the market by a very impressive margin (see just how much).
Just as crucial, bullish insider trading sentiment is a second way to look at the stock market universe. Just as you’d expect, there are a variety of stimuli for an executive to get rid of shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this method if shareholders know what to do (learn more here).
Thus, we’re going to examine the newest info about Legg Mason, Inc. (NYSE:LM).
How are hedge funds trading Legg Mason, Inc. (NYSE:LM)?
In preparation for the third quarter, a total of 25 of the hedge funds we track held long positions in this stock, a change of 39% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably.
Out of the hedge funds we follow, Nelson Peltz’s Trian Partners had the most valuable position in Legg Mason, Inc. (NYSE:LM), worth close to $399.5 million, accounting for 7.9% of its total 13F portfolio. Coming in second is GAMCO Investors, managed by Mario Gabelli, which held a $164.7 million position; the fund has 1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Mason Hawkins’s Southeastern Asset Management, David Einhorn’s Greenlight Capital and Daniel Gold’s QVT Financial.
Consequently, specific money managers were breaking ground themselves. Trian Partners, managed by Nelson Peltz, created the biggest position in Legg Mason, Inc. (NYSE:LM). Trian Partners had 399.5 million invested in the company at the end of the quarter. Mario Gabelli’s GAMCO Investors also made a $164.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Mason Hawkins’s Southeastern Asset Management, David Einhorn’s Greenlight Capital, and Daniel Gold’s QVT Financial.
How are insiders trading Legg Mason, Inc. (NYSE:LM)?
Legal insider trading, particularly when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time period, Legg Mason, Inc. (NYSE:LM) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Legg Mason, Inc. (NYSE:LM). These stocks are Waddell & Reed Financial, Inc. (NYSE:WDR), American Capital Ltd. (NASDAQ:ACAS), KKR & Co. L.P. (NYSE:KKR), Och-Ziff Capital Management Group LLC (NYSE:OZM), and Lazard Ltd (NYSE:LAZ). This group of stocks belong to the asset management industry and their market caps are closest to LM’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Waddell & Reed Financial, Inc. (NYSE:WDR)||18||0||0|
|American Capital Ltd. (NASDAQ:ACAS)||25||0||0|
|KKR & Co. L.P. (NYSE:KKR)||25||0||0|
|Och-Ziff Capital Management Group LLC (NYSE:OZM)||12||0||0|
|Lazard Ltd (NYSE:LAZ)||12||0||0|
Using the returns shown by Insider Monkey’s tactics, regular investors must always watch hedge fund and insider trading activity, and Legg Mason, Inc. (NYSE:LM) shareholders fit into this picture quite nicely.