Is International Paper Company (NYSE:IP) the right pick for your portfolio? Hedge funds are taking a bearish view. The number of bullish hedge fund positions fell by 3 in recent months.
To most investors, hedge funds are viewed as worthless, old investment vehicles of yesteryear. While there are over 8000 funds trading at present, we at Insider Monkey look at the upper echelon of this group, around 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total capital, and by monitoring their highest performing stock picks, we have unsheathed a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as integral, positive insider trading sentiment is a second way to parse down the financial markets. As the old adage goes: there are a number of motivations for an executive to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this tactic if you know where to look (learn more here).
Keeping this in mind, let’s take a look at the latest action encompassing International Paper Company (NYSE:IP).
What does the smart money think about International Paper Company (NYSE:IP)?
In preparation for this year, a total of 38 of the hedge funds we track were bullish in this stock, a change of -7% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, Doug Silverman’s Senator Investment Group had the most valuable position in International Paper Company (NYSE:IP), worth close to $166 million billion, comprising 3.7% of its total 13F portfolio. Silverman also has a $139 million call position; 1.1% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include David Cohen and Harold Levy’s Iridian Asset Management, Jeffrey Vinik’s Vinik Asset Management and Dan Loeb’s Third Point.
Seeing as International Paper Company (NYSE:IP) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of money managers who were dropping their entire stakes in Q4. Interestingly, Michael A. Price and Amos Meron’s Empyrean Capital Partners sold off the biggest position of all the hedgies we watch, totaling close to $73 million in stock.. Jean-Marie Eveillard’s fund, First Eagle Investment Management, also dropped its stock, about $71 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds in Q4.
Insider trading activity in International Paper Company (NYSE:IP)
Insider purchases made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, International Paper Company (NYSE:IP) has seen zero unique insiders buying, and 14 insider sales (see the details of insider trades here).
With the returns exhibited by the aforementioned studies, everyday investors must always watch hedge fund and insider trading sentiment, and International Paper Company (NYSE:IP) shareholders fit into this picture quite nicely.
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.