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

HSBC Holdings plc (ADR) (NYSE:HBC) was in 13 hedge funds’ portfolio at the end of December. HBC shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. There were 17 hedge funds in our database with HBC positions at the end of the previous quarter.

To the average investor, there are tons of indicators shareholders can use to track Mr. Market. Two of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a healthy amount (see just how much).

Equally as key, positive insider trading activity is another way to break down the investments you’re interested in. Just as you’d expect, there are many reasons for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this tactic if “monkeys” understand what to do (learn more here).

Now, let’s take a look at the key action regarding HSBC Holdings plc (ADR) (NYSE:HBC).

How are hedge funds trading HSBC Holdings plc (ADR) (NYSE:HBC)?

In preparation for this year, a total of 13 of the hedge funds we track were long in this stock, a change of -24% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies we track, Ken Fisher’s Fisher Asset Management had the largest position in HSBC Holdings plc (ADR) (NYSE:HBC), worth close to $651 million, accounting for 1.8% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $221.2 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Michael Messner’s Seminole Capital (Investment Mgmt), Ken Griffin’s Citadel Investment Group and Mark Broach’s Manatuck Hill Partners.

Due to the fact that HSBC Holdings plc (ADR) (NYSE:HBC) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of fund managers who sold off their entire stakes heading into 2013. Interestingly, Peter J. Eichler Jr.’s Aletheia Research and Management dumped the biggest stake of the 450+ funds we track, totaling an estimated $3 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund dumped about $2.3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds heading into 2013.

What have insiders been doing with HSBC Holdings plc (ADR) (NYSE:HBC)?

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, HSBC Holdings plc (ADR) (NYSE:HBC) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to HSBC Holdings plc (ADR) (NYSE:HBC). These stocks are Barclays PLC (ADR) (NYSE:BCS), UBS AG (USA) (NYSE:UBS), Banco Santander, S.A. (ADR) (NYSE:SAN), Itau Unibanco Holding SA (ADR) (NYSE:ITUB), and Westpac Banking Corporation (ADR) (NYSE:WBK). This group of stocks belong to the foreign money center banks industry and their market caps resemble HBC’s market cap.