AllianceBernstein Holding LP (AB): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

AllianceBernstein Holding LP (NYSE:AB) was in 10 hedge funds’ portfolio at the end of March. AB has experienced an increase in support from the world’s most elite money managers recently. There were 9 hedge funds in our database with AB positions at the end of the previous quarter.

To most market participants, hedge funds are seen as slow, outdated financial tools of yesteryear. While there are over 8000 funds with their doors open at the moment, we hone in on the masters of this club, close to 450 funds. It is widely believed that this group has its hands on most of all hedge funds’ total capital, and by paying attention to their best stock picks, we have discovered a few investment strategies that have historically outpaced the market. 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as beneficial, optimistic insider trading sentiment is another way to break down the stock market universe. There are a variety of reasons for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this strategy if investors understand where to look (learn more here).

Consequently, let’s take a gander at the key action encompassing AllianceBernstein Holding LP (NYSE:AB).

How are hedge funds trading AllianceBernstein Holding LP (NYSE:AB)?

In preparation for this quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 11% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the biggest position in AllianceBernstein Holding LP (NYSE:AB), worth close to $97 million, accounting for 0.3% of its total 13F portfolio. Coming in second is GAMCO Investors, managed by Mario Gabelli, which held a $13.4 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Jim Simons’s Renaissance Technologies, John A. Levin’s Levin Capital Strategies and Charles Davidson’s Wexford Capital.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Madison Street Partners, managed by Steven Owsley, initiated the biggest position in AllianceBernstein Holding LP (NYSE:AB). Madison Street Partners had 0.4 million invested in the company at the end of the quarter.

How are insiders trading AllianceBernstein Holding LP (NYSE:AB)?

Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past six months. Over the last half-year time period, AllianceBernstein Holding LP (NYSE:AB) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to AllianceBernstein Holding LP (NYSE:AB). These stocks are Cohen & Steers, Inc. (NYSE:CNS), Financial Engines Inc (NASDAQ:FNGN), Fortress Investment Group LLC (NYSE:FIG), Janus Capital Group Inc (NYSE:JNS), and Federated Investors Inc (NYSE:FII). This group of stocks belong to the asset management industry and their market caps are similar to AB’s market cap.

With the returns shown by the aforementioned strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and AllianceBernstein Holding LP (NYSE:AB) applies perfectly to this mantra.

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