International Business Machines Corp. (NYSE:IBM) was in 49 hedge funds’ portfolio at the end of the first quarter of 2013. IBM has seen a decrease in enthusiasm from smart money lately. There were 49 hedge funds in our database with IBM holdings at the end of the previous quarter.
To most stock holders, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds trading at present, we look at the masters of this group, about 450 funds. It is estimated that this group controls the majority of all hedge funds’ total capital, and by paying attention to their top stock picks, we have figured out a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 23.3 percentage points in 8 months (see all of our picks from August).
Just as important, bullish insider trading sentiment is a second way to break down the world of equities. As the old adage goes: there are a number of reasons for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this tactic if shareholders understand where to look (learn more here).
Consequently, let’s take a gander at the latest action surrounding International Business Machines Corp. (NYSE:IBM).
Hedge fund activity in International Business Machines Corp. (NYSE:IBM)
In preparation for this quarter, a total of 49 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably.
According to our comprehensive database, Berkshire Hathaway, managed by Warren Buffett, holds the most valuable position in International Business Machines Corp. (NYSE:IBM). Berkshire Hathaway has a $14.5304 billion position in the stock, comprising 17.1% of its 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $671.8 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other peers that hold long positions include Jim Simons’s Renaissance Technologies, Phill Gross and Robert Atchinson’s Adage Capital Management and D. E. Shaw’s D E Shaw.
Seeing as International Business Machines Corp. (NYSE:IBM) has experienced falling interest from hedge fund managers, it’s easy to see that there exists a select few money managers who were dropping their full holdings in Q1. Intriguingly, Daniel S. Och’s OZ Management cut the biggest investment of the 450+ funds we key on, comprising close to $35.1 million in stock.. Matthew Tewksbury’s fund, Stevens Capital Management, also cut its stock, about $29.7 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading International Business Machines Corp. (NYSE:IBM)?
Insider buying is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last half-year time period, International Business Machines Corp. (NYSE:IBM) has experienced zero unique insiders buying, and 12 insider sales (see the details of insider trades here).
With the returns exhibited by the aforementioned strategies, everyday investors should always watch hedge fund and insider trading activity, and International Business Machines Corp. (NYSE:IBM) is no exception.