If you’d ask most market participants, hedge funds are perceived as slow, outdated financial tools of the past. While there are more than 8000 funds trading at present, we choose to focus on the leaders of this club, around 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total asset base, and by watching their top stock picks, we have brought to light a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 25 percentage points in 6.5 month (check out a sample of our picks).
Equally as integral, bullish insider trading sentiment is another way to break down the financial markets. As the old adage goes: there are a number of incentives for an executive to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).
Consequently, it’s important to take a gander at the recent action surrounding Hanesbrands Inc. (NYSE:HBI).
What does the smart money think about Hanesbrands Inc. (NYSE:HBI)?
At the end of the fourth quarter, a total of 17 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Robert Bishop’s Impala Asset Management had the biggest position in Hanesbrands Inc. (NYSE:HBI), worth close to $48 million, comprising 2.5% of its total 13F portfolio. On Impala Asset Management’s heels is Andrew Feldstein and Stephen Siderow of Blue Mountain Capital, with a $44 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include David Keidan’s Buckingham Capital Management, David Dreman’s Dreman Value Management and Ken Griffin’s Citadel Investment Group.
Because Hanesbrands Inc. (NYSE:HBI) has faced declining sentiment from hedge fund managers, logic holds that there exists a select few funds that decided to sell off their full holdings in Q4. Intriguingly, John Kleinheinz’s Kleinheinz Capital Partners dropped the largest stake of the 450+ funds we track, comprising an estimated $8 million in stock.. Chuck Royce’s fund, Royce & Associates, also sold off its stock, about $6 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Hanesbrands Inc. (NYSE:HBI)
Bullish insider trading is at its handiest when the company in question has seen transactions within the past 180 days. Over the last six-month time period, Hanesbrands Inc. (NYSE:HBI) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
With the returns exhibited by our tactics, retail investors must always pay attention to hedge fund and insider trading sentiment, and Hanesbrands Inc. (NYSE:HBI) shareholders fit into this picture quite nicely.
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