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Should You Buy Lazard Ltd (NYSE:LAZ)? – KKR & Co. L.P. (NYSE:KKR), Legg Mason, Inc. (NYSE:LM)

Lazard Ltd (NYSE:LAZ) was in 14 hedge funds’ portfolio at the end of the fourth quarter of 2012. LAZ investors should be aware of an increase in enthusiasm from smart money recently. There were 12 hedge funds in our database with LAZ holdings at the end of the previous quarter.

Lazard Ltd (NYSE:LAZ)

In the financial world, there are tons of gauges investors can use to watch their holdings. A pair of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top investment managers can outpace the market by a significant margin (see just how much).

Equally as key, bullish insider trading sentiment is another way to break down the marketplace. Obviously, there are a number of stimuli for a bullish insider to get rid of shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this tactic if “monkeys” know what to do (learn more here).

Consequently, we’re going to take a peek at the key action surrounding Lazard Ltd (NYSE:LAZ).

How have hedgies been trading Lazard Ltd (NYSE:LAZ)?

At the end of the fourth quarter, a total of 14 of the hedge funds we track were bullish in this stock, a change of 17% from the third 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 meaningfully.

According to our comprehensive database, John W. Rogers’s Ariel Investments had the largest position in Lazard Ltd (NYSE:LAZ), worth close to $187 million, accounting for 3.9% of its total 13F portfolio. Coming in second is Trian Partners, managed by Nelson Peltz, which held a $167 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Chuck Royce’s Royce & Associates, Ken Fisher’s Fisher Asset Management and James Dondero’s Highland Capital Management.

Consequently, some big names have been driving this bullishness. Sandler Capital Management, managed by Andrew Sandler, assembled the most outsized position in Lazard Ltd (NYSE:LAZ). Sandler Capital Management had 7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $3 million investment in the stock during the quarter.

How are insiders trading Lazard Ltd (NYSE:LAZ)?

Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past six months. Over the last 180-day time period, Lazard Ltd (NYSE:LAZ) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Lazard Ltd (NYSE:LAZ). These stocks are Waddell & Reed Financial, Inc. (NYSE:WDR), American Capital Ltd. (NASDAQ:ACAS), KKR & Co. L.P. (NYSE:KKR), Och-Ziff Capital Management Group LLC (NYSE:OZM), and Legg Mason, Inc. (NYSE:LM). All of these stocks are in the asset management industry and their market caps are similar to LAZ’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Waddell & Reed Financial, Inc. (NYSE:WDR) 10 0 7
American Capital Ltd. (NASDAQ:ACAS) 21 0 9
KKR & Co. L.P. (NYSE:KKR) 19 0 2
Och-Ziff Capital Management Group LLC (NYSE:OZM) 11 0 1
Legg Mason, Inc. (NYSE:LM) 20 1 0

With the returns demonstrated by Insider Monkey’s strategies, everyday investors should always monitor hedge fund and insider trading activity, and Lazard Ltd (NYSE:LAZ) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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