United Rentals, Inc. (NYSE:URI) investors should pay attention to a decrease in hedge fund interest recently.
According to most traders, hedge funds are seen as slow, old investment vehicles of years past. While there are over 8000 funds trading today, we choose to focus on the elite of this group, about 450 funds. It is widely believed that this group oversees most of all hedge funds’ total capital, and by watching their best stock picks, we have deciphered a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as key, positive insider trading activity is another way to break down the world of equities. There are a number of incentives for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).
Keeping this in mind, it’s important to take a look at the recent action surrounding United Rentals, Inc. (NYSE:URI).
Hedge fund activity in United Rentals, Inc. (NYSE:URI)
In preparation for this quarter, a total of 50 of the hedge funds we track held long positions in this stock, a change of -6% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully.
Of the funds we track, Sean Cullinan’s Point State Capital had the largest position in United Rentals, Inc. (NYSE:URI), worth close to $103.1 million, comprising 1.5% of its total 13F portfolio. Sitting at the No. 2 spot is Glenn Russell Dubin of Highbridge Capital Management, with a $85.3 million position; 1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Paul Reeder and Edward Shapiro’s PAR Capital Management, Ken Griffin’s Citadel Investment Group and Steven Cohen’s SAC Capital Advisors.
Seeing as United Rentals, Inc. (NYSE:URI) has faced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of funds who sold off their entire stakes last quarter. At the top of the heap, Roberto Mignone’s Bridger Management dumped the largest position of the “upper crust” of funds we monitor, worth close to $46.2 million in stock., and Chuck Royce of Royce & Associates was right behind this move, as the fund cut about $12.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds last quarter.
What have insiders been doing with United Rentals, Inc. (NYSE:URI)?
Insider purchases made by high-level executives is best served when the company in focus has seen transactions within the past 180 days. Over the last six-month time period, United Rentals, Inc. (NYSE:URI) has seen zero unique insiders buying, and 8 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to United Rentals, Inc. (NYSE:URI). These stocks are Air Lease Corp (NYSE:AL), Hertz Global Holdings, Inc. (NYSE:HTZ), Avis Budget Group Inc. (NASDAQ:CAR), Ryder System, Inc. (NYSE:R), and AMERCO (NASDAQ:UHAL). This group of stocks belong to the rental & leasing services industry and their market caps match URI’s market cap.