Is Sears Holdings Corporation (NASDAQ:SHLD) the right pick for your portfolio? Hedge funds are taking a pessimistic view. The number of long hedge fund bets decreased by 2 in recent months.
In today’s marketplace, there are a multitude of methods market participants can use to analyze the equity markets. A couple of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the market by a very impressive margin (see just how much).
Equally as important, optimistic insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are plenty of stimuli for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the impressive potential of this tactic if shareholders know what to do (learn more here).
Keeping this in mind, it’s important to take a look at the key action encompassing Sears Holdings Corporation (NASDAQ:SHLD).
How are hedge funds trading Sears Holdings Corporation (NASDAQ:SHLD)?
Heading into 2013, a total of 17 of the hedge funds we track were bullish in this stock, a change of -11% from the third quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially.
According to our comprehensive database, Edward Lampert’s ESL Investments had the most valuable position in Sears Holdings Corporation (NASDAQ:SHLD), worth close to $1.503 billion, accounting for 39.2% of its total 13F portfolio. Coming in second is Bruce Berkowitz of Fairholme (FAIRX), with a $751 million position; the fund has 10.8% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Robert Jaffe’s Force Capital, Murray Stahl’s Horizon Asset Management and Debra Fine’s Fine Capital Partners.
Due to the fact that Sears Holdings Corporation (NASDAQ:SHLD) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers who sold off their positions entirely heading into 2013. Intriguingly, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners said goodbye to the biggest position of all the hedgies we watch, worth close to $12 million in stock.. Curtis Macnguyen’s fund, Ivory Capital (Investment Mgmt), also sold off its stock, about $5 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds heading into 2013.
Insider trading activity in Sears Holdings Corporation (NASDAQ:SHLD)
Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time frame, Sears Holdings Corporation (NASDAQ:SHLD) has seen 2 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned strategies, retail investors must always monitor hedge fund and insider trading sentiment, and Sears Holdings Corporation (NASDAQ:SHLD) is an important part of this process.
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