In the eyes of most stock holders, hedge funds are perceived as unimportant, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the top tier of this club, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the hedge fund industry’s total capital, and by watching their highest performing stock picks, we have come up with a number of 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as beneficial, bullish insider trading activity is a second way to parse down the stock market universe. Obviously, there are a variety of stimuli for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this tactic if you know what to do (learn more here).
With these “truths” under our belt, let’s take a glance at the latest action regarding Destination Maternity Corp (NASDAQ:DEST).
Hedge fund activity in Destination Maternity Corp (NASDAQ:DEST)
At Q1’s end, a total of 12 of the hedge funds we track were bullish in this stock, a change of 20% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially.
According to our comprehensive database, Thomas E. Lynch’s Mill Road Capital Management had the largest position in Destination Maternity Corp (NASDAQ:DEST), worth close to $23.6 million, comprising 22.1% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $22.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
As aggregate interest increased, key money managers were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the most outsized position in Destination Maternity Corp (NASDAQ:DEST). Two Sigma Advisors had 0.7 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $0.2 million position during the quarter.
Insider trading activity in Destination Maternity Corp (NASDAQ:DEST)
Bullish insider trading is particularly usable when the company in question has seen transactions within the past six months. Over the last 180-day time frame, Destination Maternity Corp (NASDAQ:DEST) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Destination Maternity Corp (NASDAQ:DEST). These stocks are New York & Company, Inc. (NYSE:NWY), The Wet Seal, Inc. (NASDAQ:WTSL), Stein Mart, Inc. (NASDAQ:SMRT), Tilly’s Inc (NYSE:TLYS), and bebe stores, inc. (NASDAQ:BEBE). This group of stocks are in the apparel stores industry and their market caps are closest to DEST’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| New York & Company, Inc. (NYSE:NWY) | 8 | 0 | 1 |
| The Wet Seal, Inc. (NASDAQ:WTSL) | 12 | 1 | 0 |
| Stein Mart, Inc. (NASDAQ:SMRT) | 5 | 0 | 0 |
| Tilly’s Inc (NYSE:TLYS) | 4 | 5 | 1 |
| bebe stores, inc. (NASDAQ:BEBE) | 8 | 1 | 0 |
With the results demonstrated by the aforementioned research, retail investors should always monitor hedge fund and insider trading sentiment, and Destination Maternity Corp (NASDAQ:DEST) applies perfectly to this mantra.
