Curious what the smart money thinks about AutoZone, Inc. (NYSE:AZO)?
To many traders, hedge funds are viewed as delayed, outdated financial tools of a forgotten age. Although there are over 8,000 hedge funds with their doors open in present day, Insider Monkey focuses on the masters of this group, around 525 funds. It is widely held that this group controls the majority of the hedge fund industry’s total assets, and by keeping an eye on their highest performing equity investments, we’ve come up with a number of investment strategies that have historically outstripped the S&P 500. 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as crucial, bullish insider trading activity is another way to look at the stock market universe. Obviously, there are lots of motivations for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this strategy if investors understand what to do (learn more here).
Keeping this in mind, we’re going to discuss the newest info about AutoZone, Inc. (NYSE:AZO).
How are hedge funds trading AutoZone, Inc. (NYSE:AZO)?
At Q2’s end, a total of 38 of the hedge funds we track were long in this stock, a change of -3% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially.
When using filings from the hedgies we track, David Cohen and Harold Levy’s Iridian Asset Management had the biggest position in AutoZone, Inc. (NYSE:AZO), worth close to $192.5 million, comprising 2.4% of its total 13F portfolio. The second largest stake is held by Andrew J. M. Spokes of Farallon Capital, with a $143.6 million position; 2.8% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Jim Simons’s Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Lykouretzos’s Hoplite Capital Management.
As AutoZone, Inc. (NYSE:AZO) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies who were dropping their entire stakes in Q1. At the top of the heap, Bain Capital’s Brookside Capital dumped the largest investment of the 450+ funds we track, comprising close to $175.6 million in stock. Jason Capello’s fund, Merchants’ Gate Capital, also cut its stock, about $105.7 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds in Q1.
What have insiders been doing with AutoZone, Inc. (NYSE:AZO)?
Insider buying is most useful when the company in focus has experienced transactions within the past 180 days. Over the latest 180-day time frame, AutoZone, Inc. (NYSE:AZO) has seen zero unique insiders purchasing, and 10 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 AutoZone, Inc. (NYSE:AZO). These stocks are U.S. Auto Parts Network, Inc. (NASDAQ:PRTS), The Pep Boys – Manny, Moe & Jack (NYSE:PBY), Advance Auto Parts, Inc. (NYSE:AAP), and O’Reilly Automotive Inc (NASDAQ:ORLY). This group of stocks are in the auto parts stores industry and their market caps match AZO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| U.S. Auto Parts Network, Inc. (NASDAQ:PRTS) | 4 | 4 | 0 |
| The Pep Boys – Manny, Moe & Jack (NYSE:PBY) | 9 | 0 | 1 |
| Advance Auto Parts, Inc. (NYSE:AAP) | 31 | 0 | 8 |
| O’Reilly Automotive Inc (NASDAQ:ORLY) | 28 | 0 | 9 |
Using the returns demonstrated by our analyses, average investors should always watch hedge fund and insider trading activity, and AutoZone, Inc. (NYSE:AZO) applies perfectly to this mantra.
