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This Metric Says You Are Smart to Buy Washington Federal Inc. (NASDAQ:WAFD)

Washington Federal Inc. (NASDAQ:WAFD) was in 16 hedge funds’ portfolio at the end of the fourth quarter of 2012. WAFD has experienced an increase in hedge fund sentiment recently. There were 11 hedge funds in our database with WAFD holdings at the end of the previous quarter.

Washington Federal Inc. (NASDAQ:WAFD)

To the average investor, there are dozens of indicators shareholders can use to track their holdings. A duo of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top fund managers can outclass the broader indices by a significant margin (see just how much).

Equally as integral, optimistic insider trading activity is another way to parse down the marketplace. There are lots of stimuli for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this tactic if investors understand where to look (learn more here).

Keeping this in mind, it’s important to take a look at the recent action regarding Washington Federal Inc. (NASDAQ:WAFD).

How are hedge funds trading Washington Federal Inc. (NASDAQ:WAFD)?

At year’s end, a total of 16 of the hedge funds we track were bullish in this stock, a change of 45% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, David Dreman’s Dreman Value Management had the biggest position in Washington Federal Inc. (NASDAQ:WAFD), worth close to $38 million, accounting for 1.1% of its total 13F portfolio. On Dreman Value Management’s heels is Chuck Royce of Royce & Associates, with a $10 million position; the fund has 0% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Jim Simons’s Renaissance Technologies, Brian J. Higgins’s King Street Capital and Neil Chriss’s Hutchin Hill Capital.

As one would reasonably expect, specific money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, established the most outsized position in Washington Federal Inc. (NASDAQ:WAFD). Renaissance Technologies had 3 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $3 million position during the quarter. The following funds were also among the new WAFD investors: Israel Englander’s Millennium Management, Glenn Russell Dubin’s Highbridge Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

What do corporate executives and insiders think about Washington Federal Inc. (NASDAQ:WAFD)?

Insider buying is particularly usable when the company in focus has seen transactions within the past six months. Over the latest 180-day time period, Washington Federal Inc. (NASDAQ:WAFD) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the results shown by our tactics, retail investors should always watch hedge fund and insider trading activity, and Washington Federal Inc. (NASDAQ:WAFD) shareholders fit into this picture quite nicely.

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

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.

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