Mead Johnson Nutrition CO (NYSE:MJN) shareholders have witnessed a decrease in enthusiasm from smart money in recent months.
To most investors, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey look at the bigwigs of this club, close to 450 funds. It is widely believed that this group has its hands on most of the smart money’s total capital, and by monitoring their top equity investments, we have spotted a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as integral, bullish insider trading sentiment is another way to parse down the world of equities. There are many incentives for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this strategy if “monkeys” know what to do (learn more here).
With these “truths” under our belt, we’re going to take a look at the recent action encompassing Mead Johnson Nutrition CO (NYSE:MJN).
Hedge fund activity in Mead Johnson Nutrition CO (NYSE:MJN)
At the end of the fourth quarter, a total of 31 of the hedge funds we track were long in this stock, a change of -9% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably.
When looking at the hedgies we track, Stephen Mandel’s Lone Pine Capital had the most valuable position in Mead Johnson Nutrition CO (NYSE:MJN), worth close to $247 million billion, accounting for 1.5% of its total 13F portfolio. On Lone Pine Capital’s heels is Bain Capital of Brookside Capital, with a $202 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Robert Karr’s Joho Capital and Jim Simons’s Renaissance Technologies.
Judging by the fact that Mead Johnson Nutrition CO (NYSE:MJN) has faced a declination in interest from hedge fund managers, we can see that there was a specific group of money managers that elected to cut their full holdings last quarter. Interestingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP cut the biggest investment of the 450+ funds we watch, comprising an estimated $70 million in stock.. Patrick McCormack’s fund, Tiger Consumer Management, also said goodbye to its stock, about $63 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds last quarter.
Insider trading activity in Mead Johnson Nutrition CO (NYSE:MJN)
Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the last 180-day time period, Mead Johnson Nutrition CO (NYSE:MJN) has seen 2 unique insiders buying, and 1 insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey’s tactics, retail investors should always keep an eye on hedge fund and insider trading activity, and Mead Johnson Nutrition CO (NYSE:MJN) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.