Is AutoZone, Inc. (NYSE:AZO) an outstanding investment right now? The best stock pickers are getting less optimistic. The number of long hedge fund bets were trimmed by 5 lately.
According to most traders, hedge funds are perceived as slow, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at the moment, we hone in on the bigwigs of this group, around 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money’s total asset base, and by tracking their best stock picks, we have formulated a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as beneficial, optimistic insider trading activity is another way to break down the investments you’re interested in. Obviously, there are lots of incentives for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would buy. Various academic studies have demonstrated the impressive potential of this method if you understand what to do (learn more here).
Now, we’re going to take a gander at the latest action surrounding AutoZone, Inc. (NYSE:AZO).
How have hedgies been trading AutoZone, Inc. (NYSE:AZO)?
Heading into Q2, a total of 39 of the hedge funds we track were long in this stock, a change of -11% from the first quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the largest position in AutoZone, Inc. (NYSE:AZO). Iridian Asset Management has a $183.4 million position in the stock, comprising 2.7% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $180.5 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Other peers with similar optimism include Bain Capital’s Brookside Capital, John Lykouretzos’s Hoplite Capital Management and Ken Griffin’s Citadel Investment Group.
Due to the fact that AutoZone, Inc. (NYSE:AZO) has witnessed bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of funds who were dropping their entire stakes at the end of the first quarter. It’s worth mentioning that Bain Capital’s Brookside Capital said goodbye to the largest investment of the “upper crust” of funds we watch, totaling an estimated $214.1 million in stock.. Andreas Halvorsen’s fund, Viking Global, also cut its stock, about $206.6 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds at the end of the first quarter.
How have insiders been trading AutoZone, Inc. (NYSE:AZO)?
Insider purchases made by high-level executives is most useful when the company in question has experienced transactions within the past half-year. Over the latest six-month time frame, AutoZone, Inc. (NYSE:AZO) has experienced zero unique insiders purchasing, and 12 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity 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 belong to the auto parts stores industry and their market caps are closest to 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) | 13 | 0 | 2 |
| Advance Auto Parts, Inc. (NYSE:AAP) | 38 | 0 | 12 |
| O’Reilly Automotive Inc (NASDAQ:ORLY) | 28 | 0 | 10 |
With the returns shown by the aforementioned tactics, retail investors must always keep an eye on hedge fund and insider trading activity, and AutoZone, Inc. (NYSE:AZO) shareholders fit into this picture quite nicely.
