Is Whole Foods Market, Inc. (NASDAQ:WFM) an outstanding investment now? Hedge funds are turning bullish. The number of bullish hedge fund positions moved up by 2 in recent months.
In the eyes of most shareholders, hedge funds are assumed to be underperforming, old investment vehicles of the past. While there are more than 8000 funds with their doors open at the moment, we look at the moguls of this group, close to 450 funds. It is widely believed that this group has its hands on the lion’s share of the hedge fund industry’s total capital, and by watching their highest performing picks, we have come up with a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped 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 24 percentage points in 7 months (explore the details and some picks here).
Equally as key, positive insider trading sentiment is another way to break down the financial markets. There are lots of reasons for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this strategy if shareholders know what to do (learn more here).
With these “truths” under our belt, let’s take a look at the key action regarding Whole Foods Market, Inc. (NASDAQ:WFM).
How have hedgies been trading Whole Foods Market, Inc. (NASDAQ:WFM)?
In preparation for this year, a total of 32 of the hedge funds we track held long positions in this stock, a change of 7% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably.
When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in Whole Foods Market, Inc. (NASDAQ:WFM), worth close to $191.5 million, comprising 0.6% of its total 13F portfolio. Sitting at the No. 2 spot is Columbus Circle Investors, managed by Donald Chiboucis, which held a $124.4 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Lee Ainslie’s Maverick Capital, James Crichton and Adam Weiss’s Scout Capital Management and Steven Cohen’s SAC Capital Advisors.
Consequently, key money managers were leading the bulls’ herd. Maverick Capital, managed by Lee Ainslie, created the most valuable position in Whole Foods Market, Inc. (NASDAQ:WFM). Maverick Capital had 52.3 million invested in the company at the end of the quarter. James Crichton and Adam Weiss’s Scout Capital Management also made a $50.2 million investment in the stock during the quarter. The following funds were also among the new WFM investors: John Lykouretzos’s Hoplite Capital Management, Sean Cullinan’s Point State Capital, and Paul Tudor Jones’s Tudor Investment Corp.
What have insiders been doing with Whole Foods Market, Inc. (NASDAQ:WFM)?
Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the last six-month time period, Whole Foods Market, Inc. (NASDAQ:WFM) has seen 1 unique insiders purchasing, and 14 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity 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.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Casey’s General Stores, Inc. (NASDAQ:CASY)||6||0||3|
|Delhaize Group (ADR) (NYSE:DEG)||6||0||0|
|Safeway Inc. (NYSE:SWY)||19||0||2|
|Companhia Brasileira de Distrib. (ADR) (NYSE:CBD)||9||0||0|
|The Kroger Co. (NYSE:KR)||19||0||16|
With the returns demonstrated by our strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Whole Foods Market, Inc. (NASDAQ:WFM) shareholders fit into this picture quite nicely.