Tempur-Pedic International Inc. (NYSE:TPX) was in 22 hedge funds’ portfolio at the end of the first quarter of 2013. TPX shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 17 hedge funds in our database with TPX positions at the end of the previous quarter.
According to most traders, hedge funds are viewed as unimportant, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at present, we hone in on the masters of this club, about 450 funds. Most estimates calculate that this group oversees most of the smart money’s total asset base, and by monitoring their highest performing investments, we have deciphered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat 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 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as key, positive insider trading sentiment is a second way to break down the investments you’re interested in. Just as you’d expect, there are a number of reasons for a bullish insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this method if investors understand what to do (learn more here).
Keeping this in mind, let’s take a look at the key action regarding Tempur-Pedic International Inc. (NYSE:TPX).
Hedge fund activity in Tempur-Pedic International Inc. (NYSE:TPX)
In preparation for this quarter, a total of 22 of the hedge funds we track were long in this stock, a change of 29% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably.
When looking at the hedgies we track, John Shapiro’s Chieftain Capital had the biggest position in Tempur-Pedic International Inc. (NYSE:TPX), worth close to $272.6 million, comprising 19.4% of its total 13F portfolio. The second largest stake is held by Doug Silverman and Alexander Klabin of Senator Investment Group, with a $261.3 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Rehan Jaffer’s H Partners Management, and Kyle Bass’s Hayman Advisors.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, created the largest position in Tempur-Pedic International Inc. (NYSE:TPX). Senator Investment Group had 261.3 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also initiated a $124.1 million position during the quarter. The following funds were also among the new TPX investors: Alexander Mitchell’s Scopus Asset Management, Spencer M. Waxman’s Shannon River Fund Management, and Mark Broach’s Manatuck Hill Partners.
Insider trading activity in Tempur-Pedic International Inc. (NYSE:TPX)
Insider purchases made by high-level executives is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Tempur-Pedic International Inc. (NYSE:TPX) has experienced 1 unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Tempur-Pedic International Inc. (NYSE:TPX). These stocks are La-Z-Boy Incorporated (NYSE:LZB), Select Comfort Corp. (NASDAQ:SCSS), Mattress Firm Holding Corp (NASDAQ:MFRM), Fortune Brands Home & Security Inc (NYSE:FBHS), and Leggett & Platt, Inc. (NYSE:LEG). This group of stocks belong to the home furnishings & fixtures industry and their market caps match TPX’s market cap.