To many of your fellow Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) investors, hedge funds are perceived as overrated, outdated investment vehicles of an era lost to time. Although there are over 8,000 hedge funds in operation currently, Insider Monkey focuses on the leaders of this club, around 525 funds. It is widely held that this group oversees most of all hedge funds’ total capital, and by paying attention to their highest quality equity investments, we’ve figured out a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as crucial, bullish insider trading sentiment is another way to look at the financial markets. There are a number of stimuli for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the useful potential of this strategy if you understand where to look (learn more here).
What’s more, it’s important to examine the newest info surrounding Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY).
How are hedge funds trading Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY)?
At Q2’s end, a total of 8 of the hedge funds we track were long in this stock, a change of -33% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.
When using filings from the hedgies we track, Ken Fisher’s Fisher Asset Management had the biggest position in Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY), worth close to $48.5 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $20.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital and Thomas Bailard’s Bailard Inc.
Due to the fact Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) has faced dropping sentiment from the smart money’s best and brightest, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their entire stakes at the end of the second quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the biggest position of all the hedgies we key on, comprising about $1.2 million in stock, and Barton Biggs of Traxis Partners was right behind this move, as the fund dumped about $0.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds at the end of the second quarter.
What do corporate executives and insiders think about Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY)?
Insider buying made by high-level executives is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time period, Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY). These stocks are Cubist Pharmaceuticals Inc (NASDAQ:CBST), United Therapeutics Corporation (NASDAQ:UTHR), Warner Chilcott Plc (NASDAQ:WCRX), Endo Health Solutions Inc (NASDAQ:ENDP), and Pharmacyclics, Inc. (NASDAQ:PCYC). This group of stocks are the members of the drug manufacturers – other industry and their market caps are closest to RDY’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Cubist Pharmaceuticals Inc (NASDAQ:CBST)||24||0||0|
|United Therapeutics Corporation (NASDAQ:UTHR)||16||0||0|
|Warner Chilcott Plc (NASDAQ:WCRX)||42||0||0|
|Endo Health Solutions Inc (NASDAQ:ENDP)||24||0||0|
|Pharmacyclics, Inc. (NASDAQ:PCYC)||27||0||0|
Using the results demonstrated by Insider Monkey’s tactics, average investors must always track hedge fund and insider trading sentiment, and Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) is an important part of this process.