Vale SA (ADR) (NYSE:VALE) investors should pay attention to a decrease in support from the world’s most elite money managers of late.
If you’d ask most shareholders, hedge funds are assumed to be worthless, old investment vehicles of yesteryear. While there are more than 8000 funds in operation today, we at Insider Monkey hone in on the bigwigs of this group, close to 450 funds. It is estimated that this group oversees most of all hedge funds’ total capital, and by monitoring their best stock picks, we have determined a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as beneficial, bullish insider trading sentiment is a second way to parse down the stock market universe. There are plenty of stimuli for an insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the valuable potential of this tactic if shareholders know what to do (learn more here).
Keeping this in mind, we’re going to take a gander at the key action encompassing Vale SA (ADR) (NYSE:VALE).
How have hedgies been trading Vale SA (ADR) (NYSE:VALE)?
Heading into 2013, a total of 25 of the hedge funds we track held long positions in this stock, a change of -14% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly.
According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the largest position in Vale SA (ADR) (NYSE:VALE). Renaissance Technologies has a $83 million billion position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $73 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Ken Fisher’s Fisher Asset Management, Peter Rathjens, Bruce Clarke and Cliff Asness’s AQR Capital Management.
Because Vale SA (ADR) (NYSE:VALE) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there is a sect of fund managers that decided to sell off their entire stakes at the end of the year. Intriguingly, Louis Bacon’s Moore Global Investments sold off the biggest position of the 450+ funds we monitor, comprising an estimated $12 million in stock.. Daniel S. Och’s fund, OZ Management, also sold off its stock, about $11 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 4 funds at the end of the year.
What do corporate executives and insiders think about Vale SA (ADR) (NYSE:VALE)?
Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time frame, Vale SA (ADR) (NYSE:VALE) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the returns exhibited by Insider Monkey’s strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Vale SA (ADR) (NYSE:VALE) applies perfectly to this mantra.
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