Federated Investors Inc (NYSE:FII) investors should pay attention to an increase in hedge fund sentiment recently.
In the eyes of most market participants, hedge funds are viewed as slow, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation today, we choose to focus on the elite of this group, around 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by watching their highest performing investments, we have found a few investment strategies that have historically outstripped the broader indices. 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 the details here).
Just as important, positive insider trading sentiment is another way to parse down the world of equities. There are lots of motivations for a bullish insider to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).
With these “truths” under our belt, it’s important to take a gander at the latest action regarding Federated Investors Inc (NYSE:FII).
How are hedge funds trading Federated Investors Inc (NYSE:FII)?
At the end of the fourth quarter, a total of 22 of the hedge funds we track were long in this stock, a change of 22% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings significantly.
Of the funds we track, Chuck Royce’s Royce & Associates had the most valuable position in Federated Investors Inc (NYSE:FII), worth close to $266 million, accounting for 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is Markel Gayner Asset Management, managed by Tom Gayner, which held a $44 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Dreman’s Dreman Value Management and Gregg J. Powers’s Private Capital Management.
As aggregate interest increased, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Federated Investors Inc (NYSE:FII). Arrowstreet Capital had 25 million invested in the company at the end of the quarter. Malcolm Fairbairn’s Ascend Capital also initiated a $6 million position during the quarter. The following funds were also among the new FII investors: Abby Flamholz and Yehuda Blinder’s ADAR Investment Management, Neil Chriss’s Hutchin Hill Capital, and Mike Vranos’s Ellington.
How have insiders been trading Federated Investors Inc (NYSE:FII)?
Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the last 180-day time period, Federated Investors Inc (NYSE:FII) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
With the results shown by Insider Monkey’s strategies, retail investors should always monitor hedge fund and insider trading sentiment, and Federated Investors Inc (NYSE:FII) is no exception.
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.