Is ITT Educational Services, Inc. (NYSE:ESI) the right investment to pursue these days? Prominent investors are in a bullish mood. The number of bullish hedge fund bets moved up by 1 lately.
To most stock holders, hedge funds are perceived as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation at the moment, we look at the moguls of this club, about 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by tracking their top picks, we have figured out a few investment strategies that have historically beaten the market. 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Just as beneficial, bullish insider trading activity is another way to parse down the stock market universe. There are a number of stimuli for an executive to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this tactic if investors understand where to look (learn more here).
Keeping this in mind, it’s important to take a peek at the latest action surrounding ITT Educational Services, Inc. (NYSE:ESI).
What have hedge funds been doing with ITT Educational Services, Inc. (NYSE:ESI)?
In preparation for this year, a total of 18 of the hedge funds we track were bullish in this stock, a change of 6% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly.
Of the funds we track, Select Equity Group, managed by Robert Joseph Caruso, holds the biggest position in ITT Educational Services, Inc. (NYSE:ESI). Select Equity Group has a $66 million position in the stock, comprising 1% of its 13F portfolio. Coming in second is Blum Capital Partners, managed by Richard Blum, which held a $58 million position; 0.3% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Cliff Asness’s AQR Capital Management, and Robert Pitts’s Steadfast Capital Management.
Consequently, key hedge funds were breaking ground themselves. Axial Capital, managed by Eliav Assouline and Marc Andersen, assembled the largest position in ITT Educational Services, Inc. (NYSE:ESI). Axial Capital had 2 million invested in the company at the end of the quarter. Himanshu H. Shah’s Shah Capital Management also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Mike Vranos’s Ellington and Charles Davidson’s Wexford Capital.
What do corporate executives and insiders think about ITT Educational Services, Inc. (NYSE:ESI)?
Bullish insider trading is most useful when the company in focus has experienced transactions within the past 180 days. Over the latest half-year time period, ITT Educational Services, Inc. (NYSE:ESI) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
With the returns demonstrated by Insider Monkey’s research, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and ITT Educational Services, Inc. (NYSE:ESI) is no exception.
Click here to learn more about Insider Monkey’s Hedge Fund Newsletter
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.
