Whole Foods Market, Inc. (WFM): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

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Whole Foods Market, Inc. (NASDAQ:WFM) investors: listen up.

If you were to ask many market players, hedge funds are seen as bloated, old financial tools of a period lost to current times. Although there are over 8,000 hedge funds in operation in present day, Insider Monkey aim at the aristocrats of this group, around 525 funds. Analysts calculate that this group has its hands on the lion’s share of the hedge fund industry’s total assets, and by watching their highest performing investments, we’ve determined a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started 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 (find a sample of our picks).

Equally as necessary, optimistic insider trading sentiment is another way to look at the financial markets. Obviously, there are many incentives for an executive to sell shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know what to do (learn more here).

What’s more, it’s important to examine the recent info surrounding Whole Foods Market, Inc. (NASDAQ:WFM).

Whole Foods Market, Inc. (NASDAQ:WFM)

What does the smart money think about Whole Foods Market, Inc. (NASDAQ:WFM)?

At Q2’s end, a total of 25 of the hedge funds we track held long positions in this stock, a change of -36% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly.

According to our 13F database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Whole Foods Market, Inc. (NASDAQ:WFM). Renaissance Technologies has a $269.8 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Philippe Laffont of Coatue Management, with a $159.3 million position; 1.8% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include James Crichton and Adam Weiss’s Scout Capital Management, Paul Ruddock and Steve Heinz’s Lansdowne Partners and Lee Ainslie’s Maverick Capital.

As Whole Foods Market, Inc. (NASDAQ:WFM) has faced declining interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who sold off their entire stakes in Q1. Intriguingly, Patrick McCormack’s Tiger Consumer Management sold off the biggest stake of all the hedgies we monitor, worth about $71.5 million in stock. Robert Pohly’s fund, Samlyn Capital, also sold off its stock, about $66.9 million worth. These moves are interesting, as total hedge fund interest dropped by 14 funds in Q1.

How have insiders been trading Whole Foods Market, Inc. (NASDAQ:WFM)?

Insider buying made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the last 180-day time frame, Whole Foods Market, Inc. (NASDAQ:WFM) has experienced 1 unique insiders purchasing, and 25 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Whole Foods Market, Inc. (NASDAQ:WFM). These stocks are Casey’s General Stores, Inc. (NASDAQ:CASY), Delhaize Group (ADR) (NYSE:DEG), Safeway Inc. (NYSE:SWY), Companhia Brasileira de Distrib. (ADR) (NYSE:CBD), and The Kroger Co. (NYSE:KR). All of these stocks are in the grocery stores industry and their market caps are similar to WFM’s market cap.

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