This Metric Says You Are Smart to Buy RealD (NYSE:RLD) – Regal Entertainment Group (NYSE:RGC), Carmike Cinemas, Inc. (NASDAQ:CKEC)

Is RealD (NYSE:RLD) the right pick for your portfolio? The smart money is taking an optimistic view. The number of long hedge fund positions rose by 3 lately.


To the average investor, there are tons of methods shareholders can use to monitor Mr. Market. Some of the most useful are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can trounce the market by a very impressive margin (see just how much).

Equally as important, positive insider trading activity is a second way to break down the marketplace. There are many reasons for a corporate insider to get rid of 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 tactic if you understand what to do (learn more here).

Now, it’s important to take a look at the latest action encompassing RealD (NYSE:RLD).

How have hedgies been trading RealD (NYSE:RLD)?

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 27% from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Bares Capital Management, managed by Brian Bares, holds the most valuable position in RealD (NYSE:RLD). Bares Capital Management has a $33 million position in the stock, comprising 5.9% of its 13F portfolio. On Bares Capital Management’s heels is Mark Broach of Manatuck Hill Partners, with a $29 million position; 5.9% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Joseph A. Jolson’s Harvest Capital Strategies, Christopher Shackelton and Adam Gray’s Coliseum Capital and Mario Gabelli’s GAMCO Investors.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Bares Capital Management, managed by Brian Bares, initiated the most outsized position in RealD (NYSE:RLD). Bares Capital Management had 33 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0 million position during the quarter. The following funds were also among the new RLD investors: Israel Englander’s Catapult Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Insider trading activity in RealD (NYSE:RLD)

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 last six-month time frame, RealD (NYSE:RLD) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to RealD (NYSE:RLD). These stocks are Reading International, Inc. (NASDAQ:RDI), Regal Entertainment Group (NYSE:RGC), Rentrak Corporation (NASDAQ:RENT), Dreamworks Animation Skg Inc (NASDAQ:DWA), and Carmike Cinemas, Inc. (NASDAQ:CKEC). This group of stocks are in the movie production, theaters industry and their market caps are closest to RLD’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Reading International, Inc. (NASDAQ:RDI) 3 1 1
Regal Entertainment Group (NYSE:RGC) 16 0 0
Rentrak Corporation (NASDAQ:RENT) 6 0 0
Dreamworks Animation Skg Inc (NASDAQ:DWA) 7 0 4
Carmike Cinemas, Inc. (NASDAQ:CKEC) 15 2 0

With the results exhibited by our research, retail investors should always watch hedge fund and insider trading sentiment, and RealD (NYSE:RLD) applies perfectly to this mantra.

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