Moody’s Corporation (MCO): Hedge Funds and Insiders Are Bullish, What Should You Do?

Page 1 of 2

Moody’s Corporation (NYSE:MCO) was in 38 hedge funds’ portfolio at the end of March. MCO investors should pay attention to an increase in support from the world’s most elite money managers of late. There were 32 hedge funds in our database with MCO positions at the end of the previous quarter.

If you’d ask most shareholders, hedge funds are viewed as worthless, old financial tools of years past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey look at the leaders of this group, around 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total asset base, and by monitoring their best investments, we have discovered a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Moody's Corporation (NYSE:MCO)Equally as important, positive insider trading sentiment is another way to break down the financial markets. There are plenty of motivations for an insider to cut shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the valuable potential of this tactic if investors understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the key action surrounding Moody’s Corporation (NYSE:MCO).

What does the smart money think about Moody’s Corporation (NYSE:MCO)?

Heading into Q2, a total of 38 of the hedge funds we track were bullish in this stock, a change of 19% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Warren Buffett’s Berkshire Hathaway had the biggest position in Moody’s Corporation (NYSE:MCO), worth close to $1.5151 billion, comprising 1.8% of its total 13F portfolio. Coming in second is Childrens Investment Fund, managed by Chris Hohn, which held a $400.1 million position; the fund has 26.6% of its 13F portfolio invested in the stock. Some other peers that are bullish include Charles Akre’s Akre Capital Management, Rob Butts and Josh Clark’s Southpoint Capital Advisors and Lou Simpson’s SQ Advisors.

As industrywide interest jumped, key money managers have been driving this bullishness. Viking Global, managed by Andreas Halvorsen, created the most valuable position in Moody’s Corporation (NYSE:MCO). Viking Global had 91.6 million invested in the company at the end of the quarter. Robert Joseph Caruso’s Select Equity Group also made a $43.6 million investment in the stock during the quarter. The other funds with brand new MCO positions are Richard Chilton’s Chilton Investment Company, Eric Chen’s Antipodean Advisors, and Jonathan Auerbach’s Hound Partners.

How have insiders been trading Moody’s Corporation (NYSE:MCO)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has seen transactions within the past six months. Over the latest 180-day time frame, Moody’s Corporation (NYSE:MCO) has experienced 2 unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Moody’s Corporation (NYSE:MCO). These stocks are FleetCor Technologies, Inc. (NYSE:FLT), Alliance Data Systems Corporation (NYSE:ADS), Verisk Analytics, Inc. (NASDAQ:VRSK), Fidelity National Information Services (NYSE:FIS), and Fiserv, Inc. (NASDAQ:FISV). This group of stocks belong to the business services industry and their market caps are closest to MCO’s market cap.

Page 1 of 2