CNinsure Inc. (ADR) (CISG): Insiders Aren’t Crazy About It

CNinsure Inc. (ADR) (NASDAQ:CISG) was in 5 hedge funds’ portfolio at the end of the first quarter of 2013. CISG has seen a decrease in activity from the world’s largest hedge funds recently. There were 6 hedge funds in our database with CISG holdings at the end of the previous quarter.

In the eyes of most traders, hedge funds are viewed as slow, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, we look at the top tier of this group, about 450 funds. It is widely believed that this group oversees most of all hedge funds’ total asset base, and by tracking their top stock picks, we have unearthed a number of investment strategies that have historically outpaced the market. 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as important, positive insider trading activity is another way to parse down the world of equities. As the old adage goes: there are a variety of incentives for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).

Now, it’s important to take a glance at the recent action surrounding CNinsure Inc. (ADR) (NASDAQ:CISG).

What have hedge funds been doing with CNinsure Inc. (ADR) (NASDAQ:CISG)?

Heading into Q2, a total of 5 of the hedge funds we track were bullish in this stock, a change of -17% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in CNinsure Inc. (ADR) (NASDAQ:CISG), worth close to $2.5 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by D. E. Shaw, which held a $1.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Prem Watsa’s Fairfax Financial Holdings, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.

Since CNinsure Inc. (ADR) (NASDAQ:CISG) has witnessed falling interest from hedge fund managers, logic holds that there were a few hedgies who were dropping their positions entirely at the end of the first quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest position of the 450+ funds we watch, worth about $0.3 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds at the end of the first quarter.

What have insiders been doing with CNinsure Inc. (ADR) (NASDAQ:CISG)?

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 last 180-day time period, CNinsure Inc. (ADR) (NASDAQ:CISG) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to CNinsure Inc. (ADR) (NASDAQ:CISG). These stocks are Erie Indemnity Company (NASDAQ:ERIE), National Financial Partners Corp. (NYSE:NFP), CorVel Corporation (NASDAQ:CRVL), Crawford & Company (NYSE:CRD-B), and eHealth, Inc. (NASDAQ:EHTH). This group of stocks are the members of the insurance brokers industry and their market caps are closest to CISG’s market cap.

With the results demonstrated by our studies, everyday investors must always keep an eye on hedge fund and insider trading activity, and CNinsure Inc. (ADR) (NASDAQ:CISG) shareholders fit into this picture quite nicely.

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