In today’s marketplace, there are many gauges investors can use to monitor the equity markets. Some of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace their index-focused peers by a superb margin (see just how much).
Equally as crucial, positive insider trading activity is a second way to look at the investments you’re interested in. Just as you’d expect, there are a variety of stimuli for an insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).
What’s more, let’s examine the recent info surrounding CVS Caremark Corporation (NYSE:CVS).
What does the smart money think about CVS Caremark Corporation (NYSE:CVS)?
In preparation for the third quarter, a total of 43 of the hedge funds we track were long in this stock, a change of -7% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially.
When using filings from the hedgies we track, First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, holds the biggest position in CVS Caremark Corporation (NYSE:CVS). First Pacific Advisors LLC has a $420.7 million position in the stock, comprising 4.5% of its 13F portfolio. On First Pacific Advisors LLC’s heels is Harris Associates, managed by Natixis Global Asset Management, which held a $315.3 million position; 0.7% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Cliff Asness’s AQR Capital Management, Mario Gabelli’s GAMCO Investors and Phill Gross and Robert Atchinson’s Adage Capital Management.
As CVS Caremark Corporation (NYSE:CVS) has faced declining interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their positions entirely last quarter. Intriguingly, Jim Simons’s Renaissance Technologies said goodbye to the biggest investment of the “upper crust” of funds we key on, comprising about $57.6 million in stock, and Ralph V. Whitworth of Relational Investors was right behind this move, as the fund sold off about $51.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds last quarter.
How have insiders been trading CVS Caremark Corporation (NYSE:CVS)?
Bullish insider trading is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last 180-day time frame, CVS Caremark Corporation (NYSE:CVS) has experienced zero unique insiders purchasing, and 2 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 CVS Caremark Corporation (NYSE:CVS). These stocks are PharMerica Corporation (NYSE:PMC), BioScrip Inc. (NASDAQ:BIOS), Rite Aid Corporation (NYSE:RAD), GNC Holdings Inc (NYSE:GNC), and Walgreen Company (NYSE:WAG). This group of stocks are the members of the drug stores industry and their market caps are closest to CVS’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|PharMerica Corporation (NYSE:PMC)||13||0||1|
|BioScrip Inc. (NASDAQ:BIOS)||16||0||2|
|Rite Aid Corporation (NYSE:RAD)||31||0||8|
|GNC Holdings Inc (NYSE:GNC)||32||0||8|
|Walgreen Company (NYSE:WAG)||41||1||4|
Using the returns explained by the previously mentioned analyses, average investors should always keep one eye on hedge fund and insider trading activity, and CVS Caremark Corporation (NYSE:CVS) is an important part of this process.