Ford Motor Company (F): Pay Attention To This Little-Known Sentiment Gauge

Ford Motor Company (NYSE:F) was in 58 hedge funds’ portfolio at the end of the fourth quarter of 2012. F has experienced an increase in enthusiasm from smart money in recent months. There were 53 hedge funds in our database with F positions at the end of the previous quarter.

If you’d ask most market participants, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at the moment, we choose to focus on the masters of this club, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total asset base, and by watching their best equity investments, we have found a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 (explore the details and some picks here).

Just as integral, bullish insider trading activity is a second way to break down the financial markets. There are a variety of stimuli for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this method if investors understand what to do (learn more here).

Keeping this in mind, we’re going to take a gander at the key action regarding Ford Motor Company (NYSE:F).

How have hedgies been trading Ford Motor Company (NYSE:F)?

In preparation for this year, a total of 58 of the hedge funds we track held long positions in this stock, a change of 9% from the third quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially.

Of the funds we track, Legg Mason Capital Management, managed by Bill Miller, holds the biggest position in Ford Motor Company (NYSE:F). Legg Mason Capital Management has a $158.8 million position in the stock, comprising 2.8% of its 13F portfolio. The second largest stake is held by Appaloosa Management LP, managed by David Tepper, which held a $144.5 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Ken Heebner’s Capital Growth Management, Robert Bishop’s Impala Asset Management and Jean-Marie Eveillard’s First Eagle Investment Management.

As one would reasonably expect, key money managers were breaking ground themselves. First Eagle Investment Management, managed by Jean-Marie Eveillard, assembled the largest position in Ford Motor Company (NYSE:F). First Eagle Investment Management had 88.9 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $63.3 million position during the quarter. The other funds with brand new F positions are Curtis Macnguyen’s Ivory Capital (Investment Mgmt), Bruce Kovner’s Caxton Associates LP, and George Soros’s Soros Fund Management.

How are insiders trading Ford Motor Company (NYSE:F)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time frame, Ford Motor Company (NYSE:F) has seen zero unique insiders buying, and 11 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Ford Motor Company (NYSE:F). These stocks are Tata Motors Limited (ADR) (NYSE:TTM), Toyota Motor Corporation (ADR) (NYSE:TM), General Motors Company (NYSE:GM), Honda Motor Co Ltd (ADR) (NYSE:HMC), and Nissan Motor Co., Ltd. (ADR) (PINK:NSANY). This group of stocks are in the auto manufacturers – major industry and their market caps are closest to F’s market cap.

With the returns demonstrated by our time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading activity, and Ford Motor Company (NYSE:F) applies perfectly to this mantra.

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