Is CapitalSource, Inc. (NYSE:CSE) a healthy stock for your portfolio? The smart money is buying. The number of bullish hedge fund positions increased by 2 recently.
In the financial world, there are many methods market participants can use to track stocks. A pair of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can trounce the S&P 500 by a significant amount (see just how much).
Equally as integral, optimistic insider trading activity is another way to break down the stock market universe. Just as you’d expect, there are a variety of motivations for an executive to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this method if investors understand where to look (learn more here).
Now, it’s important to take a peek at the key action encompassing CapitalSource, Inc. (NYSE:CSE).
What does the smart money think about CapitalSource, Inc. (NYSE:CSE)?
At the end of the fourth quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 17% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly.
Of the funds we track, Cardinal Capital, managed by Amy Minella, holds the largest position in CapitalSource, Inc. (NYSE:CSE). Cardinal Capital has a $43 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Howard Guberman of Gruss Asset Management, with a $14 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.
Now, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the largest position in CapitalSource, Inc. (NYSE:CSE). Millennium Management had 6 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $3 million position during the quarter. The following funds were also among the new CSE investors: Chuck Royce’s Royce & Associates and Mike Vranos’s Ellington.
How are insiders trading CapitalSource, Inc. (NYSE:CSE)?
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the last half-year time period, CapitalSource, Inc. (NYSE:CSE) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to CapitalSource, Inc. (NYSE:CSE). These stocks are PHH Corporation (NYSE:PHH), Credit Acceptance Corp. (NASDAQ:CACC), Cash America International, Inc. (NYSE:CSH), Nelnet, Inc. (NYSE:NNI), and First Cash Financial Services, Inc. (NASDAQ:FCFS). All of these stocks are in the credit services industry and their market caps are similar to CSE’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| PHH Corporation (NYSE:PHH) | 28 | 0 | 2 |
| Credit Acceptance Corp. (NASDAQ:CACC) | 9 | 1 | 5 |
| Cash America International, Inc. (NYSE:CSH) | 12 | 0 | 4 |
| Nelnet, Inc. (NYSE:NNI) | 14 | 0 | 2 |
| First Cash Financial Services, Inc. (NASDAQ:FCFS) | 7 | 0 | 4 |
With the results demonstrated by our time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and CapitalSource, Inc. (NYSE:CSE) shareholders fit into this picture quite nicely.
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