American Greetings Corporation (NYSE:AM) was in 12 hedge funds’ portfolio at the end of the fourth quarter of 2012. AM has experienced a decrease in enthusiasm from smart money lately. There were 15 hedge funds in our database with AM positions at the end of the previous quarter.
If you’d ask most investors, hedge funds are perceived as slow, old investment tools of the past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the top tier of this club, around 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total asset base, and by keeping an eye on their highest performing picks, we have deciphered a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Just as integral, bullish insider trading sentiment is another way to break down the stock market universe. Obviously, there are a variety of stimuli for an insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this method if investors know where to look (learn more here).
Keeping this in mind, we’re going to take a peek at the recent action surrounding American Greetings Corporation (NYSE:AM).
How have hedgies been trading American Greetings Corporation (NYSE:AM)?
At the end of the fourth quarter, a total of 12 of the hedge funds we track were long in this stock, a change of -20% from the third quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.
Of the funds we track, AQR Capital Management, managed by Cliff Asness, holds the largest position in American Greetings Corporation (NYSE:AM). AQR Capital Management has a $32 million position in the stock, comprising 0.1% of its 13F portfolio. On AQR Capital Management’s heels is Pasco Alfaro / Richard Tumure of Miura Global Management, with a $11 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Matthew Halbower’s Pentwater Capital Management, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management and David Gallo’s Valinor Management LLC.
Due to the fact that American Greetings Corporation (NYSE:AM) has faced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedgies who were dropping their entire stakes last quarter. Interestingly, Mark Travis’s Intrepid Capital Management said goodbye to the biggest investment of all the hedgies we track, worth close to $31 million in stock.. D. E. Shaw’s fund, D E Shaw, also dropped its stock, about $2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds last quarter.
What have insiders been doing with American Greetings Corporation (NYSE:AM)?
Insider purchases made by high-level executives is best served when the company we’re looking at has seen transactions within the past half-year. Over the last 180-day time period, American Greetings Corporation (NYSE:AM) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to American Greetings Corporation (NYSE:AM). These stocks are MarineMax, Inc. (NYSE:HZO), Zumiez Inc. (NASDAQ:ZUMZ), Brown Shoe Company, Inc. (NYSE:BWS), Titan Machinery Inc. (NASDAQ:TITN), and United Online, Inc. (NASDAQ:UNTD). All of these stocks are in the specialty retail, other industry and their market caps match AM’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|MarineMax, Inc. (NYSE:HZO)||7||0||7|
|Zumiez Inc. (NASDAQ:ZUMZ)||7||0||0|
|Brown Shoe Company, Inc. (NYSE:BWS)||13||0||0|
|Titan Machinery Inc. (NASDAQ:TITN)||12||0||2|
|United Online, Inc. (NASDAQ:UNTD)||13||0||2|
With the returns demonstrated by the aforementioned strategies, retail investors should always pay attention to hedge fund and insider trading activity, and American Greetings Corporation (NYSE:AM) is an important part of this process.
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.