Is HSBC Holdings plc (ADR) (HBC) Going to Burn These Hedge Funds?

Is HSBC Holdings plc (ADR) (NYSE:HBC) a great investment right now? The smart money is taking a bearish view. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience.

HSBC Holdings plc (ADR) (NYSE:HBC)

At the moment, there are many indicators market participants can use to analyze the equity markets. Some of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite investment managers can outperform the broader indices by a superb margin (see just how much).

Equally as integral, optimistic insider trading sentiment is a second way to break down the marketplace. Just as you’d expect, there are plenty of reasons for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this strategy if you understand where to look (learn more here).

Now, it’s important to take a glance at the latest action surrounding HSBC Holdings plc (ADR) (NYSE:HBC).

Hedge fund activity in HSBC Holdings plc (ADR) (NYSE:HBC)

In preparation for this quarter, a total of 15 of the hedge funds we track held long positions in this stock, a change of 0% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Fisher Asset Management, managed by Ken Fisher, holds the largest position in HSBC Holdings plc (ADR) (NYSE:HBC). Fisher Asset Management has a $660.6 million position in the stock, comprising 1.8% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $47 million position; 0.4% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Michael Messner’s Seminole Capital (Investment Mgmt), Mark Broach’s Manatuck Hill Partners and David Dreman’s Dreman Value Management.

Due to the fact that HSBC Holdings plc (ADR) (NYSE:HBC) has experienced falling interest from hedge fund managers, it’s safe to say that there is a sect of hedge funds who sold off their entire stakes last quarter. Intriguingly, John Overdeck and David Siegel’s Two Sigma Advisors dropped the largest position of the 450+ funds we track, comprising about $2.2 million in stock., and Bruce Kovner of Caxton Associates LP was right behind this move, as the fund said goodbye to about $1.4 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in HSBC Holdings plc (ADR) (NYSE:HBC)

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past six months. Over the last six-month time period, HSBC Holdings plc (ADR) (NYSE:HBC) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the results shown by our strategies, retail investors must always watch hedge fund and insider trading sentiment, and HSBC Holdings plc (ADR) (NYSE:HBC) applies perfectly to this mantra.

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