Lululemon Athletica inc. (NASDAQ:LULU) was in 19 hedge funds’ portfolio at the end of the fourth quarter of 2012. LULU has seen an increase in enthusiasm from smart money of late. There were 15 hedge funds in our database with LULU positions at the end of the previous quarter.
If you’d ask most stock holders, hedge funds are perceived as underperforming, old investment vehicles of years past. While there are more than 8000 funds trading at present, we choose to focus on the moguls of this club, around 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total asset base, and by tracking their top investments, we have determined a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 outpaced the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as important, bullish insider trading activity is another way to break down the investments you’re interested in. Obviously, there are a number of incentives for an executive to get rid of shares of his or her company, but only one, very simple reason why they would buy. Various academic studies have demonstrated the impressive potential of this strategy if “monkeys” understand what to do (learn more here).
With these “truths” under our belt, it’s important to take a gander at the latest action regarding Lululemon Athletica inc. (NASDAQ:LULU).
How are hedge funds trading Lululemon Athletica inc. (NASDAQ:LULU)?
Heading into 2013, a total of 19 of the hedge funds we track were bullish in this stock, a change of 27% from the third quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably.
When looking at the hedgies we track, Lone Pine Capital, managed by Stephen Mandel, holds the largest position in Lululemon Athletica inc. (NASDAQ:LULU). Lone Pine Capital has a $368 million position in the stock, comprising 2.3% of its 13F portfolio. On Lone Pine Capital’s heels is Tiger Consumer Management, managed by Patrick McCormack, which held a $70 million position; 1.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include David Stemerman’s Conatus Capital Management, Donald Chiboucis’s Columbus Circle Investors and Ken Griffin’s Citadel Investment Group.
Consequently, key hedge funds were breaking ground themselves. Alydar Capital, managed by John Murphy, established the most valuable call position in Lululemon Athletica inc. (NASDAQ:LULU). Alydar Capital had 15 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $11 million position during the quarter. The other funds with new positions in the stock are Steven Cohen’s SAC Capital Advisors, Steven Cohen’s SAC Capital Advisors, and SAC Subsidiary’s CR Intrinsic Investors.
How are insiders trading Lululemon Athletica inc. (NASDAQ:LULU)?
Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past 180 days. Over the last 180-day time frame, Lululemon Athletica inc. (NASDAQ:LULU) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
With the results shown by Insider Monkey’s research, retail investors must always watch hedge fund and insider trading activity, and Lululemon Athletica inc. (NASDAQ:LULU) is an important part of this process.
Click here to learn more about Insider Monkey’s Hedge Fund Newsletter
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.