This Metric Says You Are Smart to Buy Warnaco Group Inc (NYSE:WRC)

Warnaco Group Inc (NYSE:WRC) has seen an increase in activity from the world’s largest hedge funds recently.

In the eyes of most traders, hedge funds are perceived as underperforming, old investment vehicles of yesteryear. While there are over 8000 funds trading at present, we at Insider Monkey hone in on the elite of this group, close to 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total asset base, and by paying attention to their highest performing stock picks, we have identified a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).


Equally as beneficial, bullish insider trading sentiment is another way to parse down the marketplace. Just as you’d expect, there are plenty of reasons 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 academic studies have demonstrated the impressive potential of this tactic if “monkeys” understand where to look (learn more here).

With all of this in mind, let’s take a peek at the key action encompassing Warnaco Group Inc (NYSE:WRC).

Hedge fund activity in Warnaco Group Inc (NYSE:WRC)

Heading into 2013, a total of 31 of the hedge funds we track held long positions in this stock, a change of 63% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully.

According to our comprehensive database, Robert Emil Zoellner’s Alpine Associates had the biggest position in Warnaco Group Inc (NYSE:WRC), worth close to $112 million, accounting for 4.6% of its total 13F portfolio. On Alpine Associates’s heels is Cliff Asness of AQR Capital Management, with a $99 million position; 4.6% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Matthew Halbower’s Pentwater Capital Management, Israel Englander’s Millennium Management and Jane Mendillo’s Harvard Management Co.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Alpine Associates, managed by Robert Emil Zoellner, initiated the largest position in Warnaco Group Inc (NYSE:WRC). Alpine Associates had 112 million invested in the company at the end of the quarter. Matthew Halbower’s Pentwater Capital Management also initiated a $84 million position during the quarter. The following funds were also among the new WRC investors: Jane Mendillo’s Harvard Management Co, Paul Glazer’s Glazer Capital, and Clint Carlson’s Carlson Capital.

How have insiders been trading Warnaco Group Inc (NYSE:WRC)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time period, Warnaco Group Inc (NYSE:WRC) has experienced zero unique insiders purchasing, and 12 insider sales (see the details of insider trades here).

With the returns demonstrated by Insider Monkey’s studies, retail investors should always monitor hedge fund and insider trading activity, and Warnaco Group Inc (NYSE:WRC) shareholders fit into this picture quite nicely.

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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.