Hedge Funds Join The Barnes & Noble, Inc. (BKS) Hate Train

Barnes & Noble, Inc. (NYSE:BKS) was in 18 hedge funds’ portfolio at the end of Q2, a 2-fund drop from Q1. Shares are down more than 30% over the past 3 months, and there doesn’t look to be any break in sight from the onslaught. Let’s see what hedge fund managers were trading BKS.

At the moment, there are dozens of indicators investors can use to watch their holdings. Some of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite money managers can outperform the market by a very impressive margin (see just how much).

Equally as important, positive insider trading sentiment is another way to parse down the financial markets. There are a variety of stimuli for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this tactic if piggybackers understand where to look (learn more here).

Barnes & Noble, Inc. (NYSE:BKS)

With these “truths” under our belt, it’s important to take a gander at the recent action encompassing Barnes & Noble, Inc. (NYSE:BKS).

What have hedge funds been doing with Barnes & Noble, Inc. (NYSE:BKS)?

Heading into Q2, a total of 18 of the hedge funds we track were bullish in this stock, a change of -10% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes considerably.

Of the funds we track, Michael Blitzer’s Kingstown Capital Management had the largest position in Barnes & Noble, Inc. (NYSE:BKS), worth close to $12 million, comprising 2% of its total 13F portfolio. On Kingstown Capital Management’s heels is Michael Price of MFP Investors, with a $10.4 million position; 1.4% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include John A. Levin’s Levin Capital Strategies, and Andy Redleaf’s Whitebox Advisors.

Judging by the fact that Barnes & Noble, Inc. (NYSE:BKS) has faced declining sentiment from hedge fund managers, we can see that there exists a select few hedge funds that elected to cut their full holdings last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest stake of all the hedgies we track, totaling an estimated $7 million in stock. Eliav Assouline and Marc Andersen’s fund, Axial Capital, also dropped its stock, about $6.5 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds last quarter.

How have insiders been trading Barnes & Noble, Inc. (NYSE:BKS)?

Bullish insider trading is at its handiest when the company in question has seen transactions within the past 180 days. Over the last six-month time period, Barnes & Noble, Inc. (NYSE:BKS) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Barnes & Noble, Inc. (NYSE:BKS). These stocks are Francesca’s Holdings Corp (NASDAQ:FRAN), EZCORP Inc (NASDAQ:EZPW), Office Depot Inc (NYSE:ODP), OfficeMax Inc (NYSE:OMX), and Finish Line Inc (NASDAQ:FINL). This group of stocks are in the specialty retail, other industry and their market caps are closest to BKS’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Francesca’s Holdings Corp (NASDAQ:FRAN) 15 0 3
Office Depot Inc (NYSE:ODP) 27 5 1
OfficeMax Inc (NYSE:OMX) 13 0 3
Finish Line Inc (NASDAQ:FINL) 10 0 8

With the results demonstrated by our studies, retail investors should always monitor hedge fund and insider trading sentiment, and Barnes & Noble, Inc. (NYSE:BKS) is an important part of this process.

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