Do Hedge Funds and Insiders Love CBOE Holdings, Inc (CBOE)?

CBOE Holdings, Inc (NASDAQ:CBOE) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. CBOE shareholders have witnessed an increase in hedge fund sentiment of late. There were 13 hedge funds in our database with CBOE positions at the end of the previous quarter.

According to most market participants, hedge funds are seen as underperforming, outdated financial vehicles of years past. While there are over 8000 funds with their doors open today, we look at the top tier of this club, around 450 funds. Most estimates calculate that this group oversees most of the hedge fund industry’s total capital, and by keeping an eye on their highest performing equity investments, we have brought to light a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, bullish insider trading activity is another way to break down the investments you’re interested in. There are plenty of incentives for an insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this method if you know what to do (learn more here).

Keeping this in mind, let’s take a look at the recent action encompassing CBOE Holdings, Inc (NASDAQ:CBOE).

Hedge fund activity in CBOE Holdings, Inc (NASDAQ:CBOE)

At Q1’s end, a total of 15 of the hedge funds we track held long positions in this stock, a change of 15% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Renaissance Technologies, managed by Jim Simons, holds the biggest position in CBOE Holdings, Inc (NASDAQ:CBOE). Renaissance Technologies has a $81.2 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which held a $13.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Israel Englander’s Millennium Management, and Matthew Hulsizer’s PEAK6 Capital Management.

As aggregate interest increased, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in CBOE Holdings, Inc (NASDAQ:CBOE). Balyasny Asset Management had 2.8 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $2.6 million position during the quarter. The following funds were also among the new CBOE investors: Morris Mark’s Mark Asset Management, Matthew Tewksbury’s Stevens Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.

What do corporate executives and insiders think about CBOE Holdings, Inc (NASDAQ:CBOE)?

Insider buying is most useful when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time frame, CBOE Holdings, Inc (NASDAQ:CBOE) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to CBOE Holdings, Inc (NASDAQ:CBOE). These stocks are Apollo Investment Corp. (NASDAQ:AINV), NASDAQ OMX Group, Inc. (NASDAQ:NDAQ), Ares Capital Corporation (NASDAQ:ARCC), A.F.P Provida SA (ADR) (NYSE:PVD), and Apollo Global Management LLC (NYSE:APO). All of these stocks are in the diversified investments industry and their market caps match CBOE’s market cap.

With the returns shown by the aforementioned strategies, everyday investors should always watch hedge fund and insider trading sentiment, and CBOE Holdings, Inc (NASDAQ:CBOE) is an important part of this process.

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