Is Stamps.com Inc. (NASDAQ:STMP) a buy here? The smart money is taking a pessimistic view. The number of bullish hedge fund bets shrunk by 1 recently.
If you’d ask most investors, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are more than 8000 funds with their doors open at present, we hone in on the upper echelon of this group, about 450 funds. Most estimates calculate that this group controls the lion’s share of all hedge funds’ total asset base, and by tracking their best investments, we have figured out a few investment strategies that have historically beaten the market. 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 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 all of our picks from August).
Just as integral, optimistic insider trading sentiment is another way to break down the stock market universe. Just as you’d expect, there are lots of incentives for an insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).
With all of this in mind, we’re going to take a glance at the key action surrounding Stamps.com Inc. (NASDAQ:STMP).
Hedge fund activity in Stamps.com Inc. (NASDAQ:STMP)
In preparation for this quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of -9% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies we track, Spencer M. Waxman’s Shannon River Fund Management had the most valuable position in Stamps.com Inc. (NASDAQ:STMP), worth close to $13.8 million, comprising 1.6% of its total 13F portfolio. On Shannon River Fund Management’s heels is Bares Capital Management, managed by Brian Bares, which held a $11.1 million position; 1.4% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Jim Simons’s Renaissance Technologies, Ric Dillon’s Diamond Hill Capital and Constantinos J. Christofilis’s Archon Capital Management.
Since Stamps.com Inc. (NASDAQ:STMP) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that elected to cut their positions entirely in Q1. Intriguingly, Brian Ashford-Russell and Tim Woolley’s Polar Capital dropped the biggest stake of all the hedgies we monitor, valued at an estimated $1.8 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund sold off about $0.7 million worth. These transactions are important to note, as total hedge fund interest was cut by 1 funds in Q1.
How are insiders trading Stamps.com Inc. (NASDAQ:STMP)?
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time frame, Stamps.com Inc. (NASDAQ:STMP) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Stamps.com Inc. (NASDAQ:STMP). These stocks are ValueVision Media, Inc. (NASDAQ:VVTV), Vitacost.com, Inc. (NASDAQ:VITC), Overstock.com, Inc. (NASDAQ:OSTK), E Commerce China Dangdang Inc (ADR) (NYSE:DANG), and PC Connection, Inc. (NASDAQ:PCCC). All of these stocks are in the catalog & mail order houses industry and their market caps resemble STMP’s market cap.