Should You Buy DigitalGlobe Inc (NYSE:DGI)?

DigitalGlobe Inc (NYSE:DGI) investors should be aware of an increase in hedge fund sentiment in recent months.


To most investors, hedge funds are seen as unimportant, old investment tools of years past. While there are over 8000 funds in operation at present, we at Insider Monkey choose to focus on the crème de la crème of this group, about 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total capital, and by watching their best picks, we have come up with a few investment strategies that have historically outpaced Mr. Market. 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 started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Just as key, positive insider trading sentiment is a second way to parse down the world of equities. Just as you’d expect, there are plenty of incentives for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if investors know what to do (learn more here).

Consequently, it’s important to take a look at the key action surrounding DigitalGlobe Inc (NYSE:DGI).

How are hedge funds trading DigitalGlobe Inc (NYSE:DGI)?

At year’s end, a total of 22 of the hedge funds we track held long positions in this stock, a change of 10% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Christopher Pucillo’s Solus Alternative Asset Management had the most valuable position in DigitalGlobe Inc (NYSE:DGI), worth close to $45 million, comprising 16.7% of its total 13F portfolio. Coming in second is Clovis Capital Management, managed by Scott Scher & Michael Prober, which held a $37 million position; 1.9% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Peter Adam Hochfelder’s Brahman Capital, Jay Petschek and Steven Major’s Corsair Capital Management and Mariko Gordon’s Daruma Asset Management.

As aggregate interest increased, key money managers were leading the bulls’ herd. Daruma Asset Management, managed by Mariko Gordon, initiated the most valuable position in DigitalGlobe Inc (NYSE:DGI). Daruma Asset Management had 32 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $12 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Neil Chriss’s Hutchin Hill Capital, and Richard Driehaus’s Driehaus Capital.

How have insiders been trading DigitalGlobe Inc (NYSE:DGI)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time period, DigitalGlobe Inc (NYSE:DGI) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

With the results exhibited by our tactics, everyday investors must always monitor hedge fund and insider trading sentiment, and DigitalGlobe Inc (NYSE:DGI) applies perfectly to this mantra.

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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.