Hewlett-Packard Company (NYSE:HPQ) was in 47 hedge funds’ portfolio at the end of the fourth quarter of 2012. HPQ shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 47 hedge funds in our database with HPQ positions at the end of the previous quarter.
In the eyes of most stock holders, hedge funds are perceived as unimportant, outdated investment vehicles of yesteryear. While there are over 8000 funds trading at the moment, we at Insider Monkey choose to focus on the leaders of this club, close to 450 funds. It is estimated that this group controls the lion’s share of all hedge funds’ total capital, and by tracking their top equity investments, we have found a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat 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 topped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Just as important, positive insider trading sentiment is another way to break down the financial markets. As the old adage goes: there are a number of incentives for an insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the useful potential of this tactic if “monkeys” know where to look (learn more here).
With these “truths” under our belt, we’re going to take a gander at the recent action surrounding Hewlett-Packard Company (NYSE:HPQ).
How have hedgies been trading Hewlett-Packard Company (NYSE:HPQ)?
At year’s end, a total of 47 of the hedge funds we track held long positions in this stock, a change of 0% from the third quarter. With hedge funds’ 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, Richard S. Pzena’s Pzena Investment Management had the largest position in Hewlett-Packard Company (NYSE:HPQ), worth close to $586 million billion, comprising 4.8% of its total 13F portfolio. Sitting at the No. 2 spot is Relational Investors, managed by Ralph V. Whitworth, which held a $492 million position; the fund has 9.4% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Donald Yacktman’s Yacktman Asset Management, William B. Gray’s Orbis Investment Management and Wallace Weitz’s Wallace R. Weitz & Co..
Since Hewlett-Packard Company (NYSE:HPQ) has faced falling interest from the smart money, it’s easy to see that there exists a select few money managers that decided to sell off their full holdings at the end of the year. It’s worth mentioning that Seth Klarman’s Baupost Group said goodbye to the largest investment of the 450+ funds we watch, comprising an estimated $245 million in stock., and Robert Rodriguez and Steven Romick of First Pacific Advisors LLC was right behind this move, as the fund dumped about $57 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading Hewlett-Packard Company (NYSE:HPQ)?
Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time frame, Hewlett-Packard Company (NYSE:HPQ) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the returns shown by our time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Hewlett-Packard Company (NYSE:HPQ) is an important part of this process.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.