Is Kid Brands Inc (NYSE:KID) going to take off soon? Prominent investors are becoming less hopeful. The number of long hedge fund positions dropped by 1 recently.
According to most traders, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading today, we look at the elite of this group, about 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by watching their top picks, we have unearthed a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 23.3 percentage points in 8 months (see the details here).
Just as beneficial, bullish insider trading sentiment is a second way to parse down the financial markets. As the old adage goes: there are plenty of stimuli for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this tactic if shareholders know what to do (learn more here).
With all of this in mind, we’re going to take a peek at the recent action surrounding Kid Brands Inc (NYSE:KID).
What have hedge funds been doing with Kid Brands Inc (NYSE:KID)?
At the end of the first quarter, a total of 6 of the hedge funds we track were bullish in this stock, a change of -14% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes substantially.
According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Kid Brands Inc (NYSE:KID). Royce & Associates has a $2.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Nelson Obus of Wynnefield Capital, with a $1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Jim Simons’s Renaissance Technologies, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Since Kid Brands Inc (NYSE:KID) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few money managers who sold off their positions entirely heading into Q2. It’s worth mentioning that D. E. Shaw’s D E Shaw sold off the largest stake of the “upper crust” of funds we key on, valued at an estimated $0 million in stock. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q2.
What have insiders been doing with Kid Brands Inc (NYSE:KID)?
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time frame, Kid Brands Inc (NYSE:KID) has experienced 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Kid Brands Inc (NYSE:KID). These stocks are Mattel, Inc. (NASDAQ:MAT), Hasbro, Inc. (NASDAQ:HAS), LeapFrog Enterprises, Inc. (NYSE:LF), JAKKS Pacific, Inc. (NASDAQ:JAKK), and Gaming Partners International Corp. (NASDAQ:GPIC). This group of stocks are the members of the toys & games industry and their market caps are closest to KID’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Mattel, Inc. (NASDAQ:MAT)||23||0||13|
|Hasbro, Inc. (NASDAQ:HAS)||14||0||9|
|LeapFrog Enterprises, Inc. (NYSE:LF)||17||0||0|
|JAKKS Pacific, Inc. (NASDAQ:JAKK)||9||1||0|
|Gaming Partners International Corp. (NASDAQ:GPIC)||2||0||1|
With the returns shown by our time-tested strategies, everyday investors must always monitor hedge fund and insider trading sentiment, and Kid Brands Inc (NYSE:KID) applies perfectly to this mantra.