Sally Beauty Holdings, Inc. (NYSE:SBH) investors should pay attention to a decrease in hedge fund sentiment lately.
To the average investor, there are plenty of metrics shareholders can use to watch Mr. Market. A pair of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the S&P 500 by a significant margin (see just how much).
Equally as integral, optimistic insider trading sentiment is another way to parse down the stock market universe. Just as you’d expect, there are many reasons for an executive to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this method if shareholders understand what to do (learn more here).
Now, it’s important to take a look at the latest action encompassing Sally Beauty Holdings, Inc. (NYSE:SBH).
How have hedgies been trading Sally Beauty Holdings, Inc. (NYSE:SBH)?
At the end of the first quarter, a total of 27 of the hedge funds we track were long in this stock, a change of -25% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings substantially.
According to our comprehensive database, Scout Capital Management, managed by James Crichton and Adam Weiss, holds the largest position in Sally Beauty Holdings, Inc. (NYSE:SBH). Scout Capital Management has a $408.6 million position in the stock, comprising 5.2% of its 13F portfolio. Sitting at the No. 2 spot is Pennant Capital Management, managed by Alan Fournier, which held a $206.2 million position; 4% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Stephen Mandel’s Lone Pine Capital, John Griffin’s Blue Ridge Capital and Thomas Steyer’s Farallon Capital.
Since Sally Beauty Holdings, Inc. (NYSE:SBH) has experienced bearish sentiment from hedge fund managers, it’s safe to say that there exists a select few hedge funds who sold off their entire stakes last quarter. Interestingly, Michael A. Price and Amos Meron’s Empyrean Capital Partners cut the biggest investment of all the hedgies we track, comprising an estimated $61.3 million in stock., and Doug Silverman and Alexander Klabin of Senator Investment Group was right behind this move, as the fund cut about $35.8 million worth. These moves are interesting, as total hedge fund interest dropped by 9 funds last quarter.
How have insiders been trading Sally Beauty Holdings, Inc. (NYSE:SBH)?
Insider buying is particularly usable when the company in focus has seen transactions within the past half-year. Over the last six-month time period, Sally Beauty Holdings, Inc. (NYSE:SBH) has seen 1 unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Sally Beauty Holdings, Inc. (NYSE:SBH). These stocks are Sothebys (NYSE:BID), Staples, Inc. (NASDAQ:SPLS), HSN, Inc. (NASDAQ:HSNI), Tractor Supply Company (NASDAQ:TSCO), and PetSmart, Inc. (NASDAQ:PETM). This group of stocks are in the 0 industry and their market caps are similar to SBH’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Staples, Inc. (NASDAQ:SPLS)||37||0||0|
|HSN, Inc. (NASDAQ:HSNI)||11||1||8|
|Tractor Supply Company (NASDAQ:TSCO)||24||0||8|
|PetSmart, Inc. (NASDAQ:PETM)||23||0||12|
With the results shown by the aforementioned strategies, retail investors should always monitor hedge fund and insider trading sentiment, and Sally Beauty Holdings, Inc. (NYSE:SBH) applies perfectly to this mantra.