Is Central Garden & Pet Co (NASDAQ:CENT) worth your attention right now? The best stock pickers are reducing their bets on the stock. The number of bullish hedge fund positions dropped by 1 lately.
According to most market participants, hedge funds are assumed to be underperforming, old financial tools of the past. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the masters of this club, close to 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total capital, and by watching their top investments, we have deciphered a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat 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 outpaced the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as important, optimistic insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are plenty of stimuli for an insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know where to look (learn more here).
With these “truths” under our belt, let’s take a gander at the latest action surrounding Central Garden & Pet Co (NASDAQ:CENT).
How are hedge funds trading Central Garden & Pet Co (NASDAQ:CENT)?
At the end of the fourth quarter, a total of 6 of the hedge funds we track were bullish in this stock, a change of -14% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully.
Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Central Garden & Pet Co (NASDAQ:CENT). Royce & Associates has a $6.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates’s heels is AQR Capital Management, managed by Cliff Asness, which held a $6.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include J. Carlo Cannell’s Cannell Capital, Jim Simons’s Renaissance Technologies and Andy Redleaf’s Whitebox Advisors.
Because Central Garden & Pet Co (NASDAQ:CENT) has faced declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their full holdings last quarter. At the top of the heap, Michael Hintze’s CQS Cayman LP cut the largest position of the “upper crust” of funds we track, comprising close to $2.2 million in stock. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
How have insiders been trading Central Garden & Pet Co (NASDAQ:CENT)?
Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, Central Garden & Pet Co (NASDAQ:CENT) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Central Garden & Pet Co (NASDAQ:CENT). These stocks are Cal-Maine Foods Inc (NASDAQ:CALM), Dole Food Company, Inc. (NYSE:DOLE), Annies Inc (NYSE:BNNY), Amira Nature Foods Ltd (NYSE:ANFI), and ZHONGPIN INC. (NASDAQ:HOGS). This group of stocks are the members of the food – major diversified industry and their market caps resemble CENT’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Cal-Maine Foods Inc (NASDAQ:CALM) | 9 | 0 | 1 |
| Dole Food Company, Inc. (NYSE:DOLE) | 15 | 0 | 2 |
| Annies Inc (NYSE:BNNY) | 10 | 1 | 6 |
| Amira Nature Foods Ltd (NYSE:ANFI) | 4 | 0 | 0 |
| ZHONGPIN INC. (NASDAQ:HOGS) | 12 | 0 | 0 |
With the results demonstrated by the aforementioned time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Central Garden & Pet Co (NASDAQ:CENT) is no exception.
