This Metric Says You Are Smart to Sell Vail Resorts, Inc. (NYSE:MTN) – Penn National Gaming, Inc (NASDAQ:PENN), Ameristar Casinos, Inc. (NASDAQ:ASCA)

Vail Resorts, Inc. (NYSE:MTN) investors should be aware of a decrease in enthusiasm from smart money in recent months.

To most shareholders, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are more than 8000 funds in operation at the moment, we at Insider Monkey hone in on the elite of this club, close to 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by watching their top equity investments, we have spotted a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat 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 (check out a sample of our picks).

Bearish options on Vail Resorts pay off for some traders as shares slide

Just as important, optimistic insider trading activity is a second way to break down the marketplace. Just as you’d expect, there are a variety of reasons for an executive to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this strategy if investors know where to look (learn more here).

Now, we’re going to take a peek at the latest action encompassing Vail Resorts, Inc. (NYSE:MTN).

What have hedge funds been doing with Vail Resorts, Inc. (NYSE:MTN)?

At the end of the fourth quarter, a total of 11 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably.

According to our comprehensive database, Southeastern Asset Management, managed by Mason Hawkins, holds the largest position in Vail Resorts, Inc. (NYSE:MTN). Southeastern Asset Management has a $193 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is Third Avenue Management, managed by Martin Whitman, which held a $24 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Abby Flamholz and Yehuda Blinder’s ADAR Investment Management, Israel Englander’s Millennium Management and Drew Cupps’s Cupps Capital Management.

Because Vail Resorts, Inc. (NYSE:MTN) has witnessed bearish sentiment from the smart money, it’s easy to see that there exists a select few money managers that elected to cut their full holdings in Q4. Interestingly, Andrew Sandler’s Sandler Capital Management dumped the largest investment of the 450+ funds we watch, totaling close to $22 million in stock.. Jim Simons’s fund, Renaissance Technologies, also cut its stock, about $4 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Vail Resorts, Inc. (NYSE:MTN)?

Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time frame, Vail Resorts, Inc. (NYSE:MTN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Vail Resorts, Inc. (NYSE:MTN). These stocks are Caesars Entertainment Corp (NASDAQ:CZR), Marriott Vacations Worldwide Corp (NYSE:VAC), Penn National Gaming, Inc (NASDAQ:PENN), Ameristar Casinos, Inc. (NASDAQ:ASCA), and Pinnacle Entertainment, Inc (NYSE:PNK). This group of stocks are the members of the resorts & casinos industry and their market caps are closest to MTN’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Caesars Entertainment Corp (NASDAQ:CZR) 9 0 0
Marriott Vacations Worldwide Corp (NYSE:VAC) 15 1 5
Penn National Gaming, Inc (NASDAQ:PENN) 28 3 7
Ameristar Casinos, Inc. (NASDAQ:ASCA) 26 0 1
Pinnacle Entertainment, Inc (NYSE:PNK) 16 0 0

With the returns exhibited by the aforementioned time-tested strategies, everyday investors must always watch hedge fund and insider trading activity, and Vail Resorts, Inc. (NYSE:MTN) applies perfectly to this mantra.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.