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Hedge Funds Aren’t Crazy About Rockville Financial Inc (RCKB) Anymore: Meridian Interstate Bancorp, Inc. (EBSB), HomeStreet Inc (HMST)

Rockville Financial Inc (NASDAQ:RCKB) has experienced a decrease in activity from the world’s largest hedge funds of late.


To most shareholders, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are over 8000 funds trading at the moment, we at Insider Monkey look at the bigwigs of this group, close to 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total capital, and by monitoring their highest performing picks, we have formulated a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as key, bullish insider trading activity is another way to break down the investments you’re interested in. As the old adage goes: there are many motivations for an executive to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this method if “monkeys” understand what to do (learn more here).

Keeping this in mind, we’re going to take a gander at the recent action encompassing Rockville Financial Inc (NASDAQ:RCKB).

Hedge fund activity in Rockville Financial Inc (NASDAQ:RCKB)

Heading into 2013, a total of 5 of the hedge funds we track were bullish in this stock, a change of -38% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially.

When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Rockville Financial Inc (NASDAQ:RCKB). Renaissance Technologies has a $5 million position in the stock, comprising 0% of its 13F portfolio. On Renaissance Technologies’s heels is Howard Guberman of Gruss Asset Management, with a $4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, David Cohen and Harold Levy’s Iridian Asset Management and Amy Minella’s Cardinal Capital.

Due to the fact that Rockville Financial Inc (NASDAQ:RCKB) has faced a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds who were dropping their full holdings heading into 2013. At the top of the heap, D. E. Shaw’s D E Shaw said goodbye to the biggest position of all the hedgies we watch, worth an estimated $1 million in stock., and Ken Griffin of Citadel Investment Group was right behind this move, as the fund said goodbye to about $0 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds heading into 2013.

How have insiders been trading Rockville Financial Inc (NASDAQ:RCKB)?

Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the last 180-day time frame, Rockville Financial Inc (NASDAQ:RCKB) has seen 3 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Rockville Financial Inc (NASDAQ:RCKB). These stocks are Meridian Interstate Bancorp, Inc. (NASDAQ:EBSB), HomeStreet Inc (NASDAQ:HMST), Clifton Savings Bancorp, Inc. (NASDAQ:CSBK), Provident New York Bancorp (NYSE:PBNY), and First Financial Holdings, Inc. (NASDAQ:FFCH). All of these stocks are in the savings & loans industry and their market caps resemble RCKB’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Meridian Interstate Bancorp, Inc. (NASDAQ:EBSB) 1 4 2
HomeStreet Inc (NASDAQ:HMST) 7 2 4
Clifton Savings Bancorp, Inc. (NASDAQ:CSBK) 2 0 1
Provident New York Bancorp (NYSE:PBNY) 2 1 1
First Financial Holdings, Inc. (NASDAQ:FFCH) 10 1 0

With the returns shown by our tactics, retail investors must always monitor hedge fund and insider trading activity, and Rockville Financial Inc (NASDAQ:RCKB) applies perfectly to this mantra.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.