Hedge Funds Are Selling Cabelas Inc (CAB)

Cabelas Inc (NYSE:CAB) has seen a decrease in enthusiasm from smart money of late.

In the eyes of most investors, hedge funds are seen as slow, old investment tools of the past. While there are greater than 8000 funds in operation today, we at Insider Monkey look at the elite of this club, close to 450 funds. It is estimated that this group has its hands on the lion’s share of the smart money’s total capital, and by watching their best stock picks, we have deciphered a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as key, optimistic insider trading activity is a second way to parse down the marketplace. Just as you’d expect, there are a number of stimuli for a bullish insider to sell shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this strategy if you know what to do (learn more here).

With these “truths” under our belt, let’s take a glance at the recent action regarding Cabelas Inc (NYSE:CAB).

What have hedge funds been doing with Cabelas Inc (NYSE:CAB)?

At the end of the first quarter, a total of 17 of the hedge funds we track were long in this stock, a change of -11% from the first quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Ken Fisher’s Fisher Asset Management had the most valuable position in Cabelas Inc (NYSE:CAB), worth close to $122.7 million, accounting for 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Panayotis Takis Sparaggis of Alkeon Capital Management, with a $70.5 million position; 1.5% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Donald Chiboucis’s Columbus Circle Investors, Robert Joseph Caruso’s Select Equity Group and Matthew Hulsizer’s PEAK6 Capital Management.

Seeing as Cabelas Inc (NYSE:CAB) has faced a declination in interest from the aggregate hedge fund industry, logic holds that there were a few fund managers that slashed their full holdings heading into Q2. Interestingly, Rob Citrone’s Discovery Capital Management cut the largest position of the “upper crust” of funds we monitor, worth an estimated $19.9 million in stock., and James Dondero of Highland Capital Management was right behind this move, as the fund cut about $6.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q2.

Insider trading activity in Cabelas Inc (NYSE:CAB)

Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the last six-month time period, Cabelas Inc (NYSE:CAB) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

With the returns shown by the aforementioned time-tested strategies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Cabelas Inc (NYSE:CAB) applies perfectly to this mantra.

Click here to learn why you should track hedge funds