Vector Group Ltd (NYSE:VGR) was in 10 hedge funds’ portfolio at the end of the fourth quarter of 2012. VGR investors should pay attention to an increase in support from the world’s most elite money managers of late. There were 7 hedge funds in our database with VGR holdings at the end of the previous quarter.
According to most investors, hedge funds are viewed as underperforming, old investment vehicles of yesteryear. While there are more than 8000 funds trading today, we at Insider Monkey look at the aristocrats of this group, about 450 funds. It is widely believed that this group controls most of all hedge funds’ total asset base, and by watching their top investments, we have deciphered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 24 percentage points in 7 months (see the details here).
Just as key, positive insider trading activity is another way to break down the stock market universe. As the old adage goes: there are plenty of stimuli for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this strategy if piggybackers understand what to do (learn more here).
Keeping this in mind, we’re going to take a peek at the recent action encompassing Vector Group Ltd (NYSE:VGR).
Hedge fund activity in Vector Group Ltd (NYSE:VGR)
Heading into 2013, a total of 10 of the hedge funds we track held long positions in this stock, a change of 43% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially.
Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in Vector Group Ltd (NYSE:VGR). Renaissance Technologies has a $62 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 $8 million position; the fund has 0% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Michael A. Price and Amos Meron’s Empyrean Capital Partners and D. E. Shaw’s D E Shaw.
As industrywide interest jumped, some big names were leading the bulls’ herd. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, assembled the most outsized position in Vector Group Ltd (NYSE:VGR). Empyrean Capital Partners had 5 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $3 million position during the quarter. The following funds were also among the new VGR investors: Glenn Russell Dubin’s Highbridge Capital Management and Cliff Asness’s AQR Capital Management.
How have insiders been trading Vector Group Ltd (NYSE:VGR)?
Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the latest half-year time period, Vector Group Ltd (NYSE:VGR) has seen 2 unique insiders purchasing, and 3 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 Vector Group Ltd (NYSE:VGR). These stocks are Philip Morris International Inc. (NYSE:PM), British American Tobacco PLC (ADR) (NYSEAMEX:BTI), Altria Group Inc (NYSE:MO), Reynolds American, Inc. (NYSE:RAI), and Lorillard Inc. (NYSE:LO). This group of stocks belong to the industry and their market caps match VGR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Philip Morris International Inc. (NYSE:PM) | 46 | 2 | 6 |
| British American Tobacco PLC (ADR) (NYSEAMEX:BTI) | 9 | 0 | 0 |
| Altria Group Inc (NYSE:MO) | 29 | 0 | 2 |
| Reynolds American, Inc. (NYSE:RAI) | 17 | 0 | 15 |
| Lorillard Inc. (NYSE:LO) | 22 | 1 | 5 |
With the returns shown by the aforementioned tactics, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Vector Group Ltd (NYSE:VGR) shareholders fit into this picture quite nicely.
