This Metric Says You Are Smart to Sell Quad/Graphics, Inc. (QUAD)

Should Quad/Graphics, Inc. (NYSE:QUAD) investors track the following data?

In the eyes of many of your peers, hedge funds are viewed as delayed, outdated investment vehicles of an era lost to time. Although there are more than 8,000 hedge funds trading in present day, this site looks at the bigwigs of this group, around 525 funds. Analysts calculate that this group controls the majority of all hedge funds’ total assets, and by keeping an eye on their best picks, we’ve unsheathed a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as useful, bullish insider trading activity is another way to analyze the financial markets. As the old adage goes: there are many motivations for an insider to downsize shares of his or her company, but only one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this method if piggybackers understand where to look (learn more here).

Keeping this in mind, let’s study the latest info about Quad/Graphics, Inc. (NYSE:QUAD).

Hedge fund activity in Quad/Graphics, Inc. (NYSE:QUAD)

At Q2’s end, a total of 10 of the hedge funds we track were long in this stock, a change of -9% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes considerably.

According to our 13F database, Mark T. Gallogly’s Centerbridge Partners had the most valuable position in Quad/Graphics, Inc. (NYSE:QUAD), worth close to $55 million, comprising 5.5% of its total 13F portfolio. Sitting at the No. 2 spot is John M. Angelo and Michael L. Gordon of Angelo Gordon & Co, with a $53.1 million position; 3.8% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Ron Gutfleish’s Elm Ridge Capital, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.

Due to the fact Quad/Graphics, Inc. (NYSE:QUAD) has faced a fall in interest from upper-tier hedge fund managers, logic holds that there were a few hedge funds that elected to cut their positions entirely in Q1. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp dumped the largest position of all the hedgies we watch, valued at close to $0.3 million in stock. Gregory Fraser Rudolph Kluiber and Timothy Kroch’s fund, GRT Capital Partners, also dumped its stock, about $0.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds in Q1.

What do corporate executives and insiders think about Quad/Graphics, Inc. (NYSE:QUAD)?

Bullish insider trading is best served when the company in focus has experienced transactions within the past half-year. Over the last six-month time frame, Quad/Graphics, Inc. (NYSE:QUAD) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Quad/Graphics, Inc. (NYSE:QUAD). These stocks are ABM Industries, Inc. (NYSE:ABM), ExlService Holdings, Inc. (NASDAQ:EXLS), NetSpend Holdings Inc (NASDAQ:NTSP), TeleTech Holdings, Inc. (NASDAQ:TTEC), and Atlas Resource Partners, L.P. (NYSE:ARP). This group of stocks belong to the business services industry and their market caps resemble QUAD’s market cap.