Hedge Funds Are Betting On O’Reilly Automotive Inc (ORLY)

O’Reilly Automotive Inc (NASDAQ:ORLY) was in 28 hedge funds’ portfolio at the end of the first quarter of 2013. ORLY investors should be aware of an increase in hedge fund sentiment of late. There were 25 hedge funds in our database with ORLY holdings at the end of the previous quarter.

At the moment, there are dozens of indicators shareholders can use to analyze the equity markets. A couple of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the market by a healthy amount (see just how much).

Equally as integral, positive insider trading sentiment is a second way to parse down the marketplace. Just as you’d expect, there are a number of incentives for an insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Various empirical 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 glance at the latest action surrounding O’Reilly Automotive Inc (NASDAQ:ORLY).

What have hedge funds been doing with O’Reilly Automotive Inc (NASDAQ:ORLY)?

Heading into Q2, a total of 28 of the hedge funds we track were bullish in this stock, a change of 12% from the previous quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially.

When looking at the hedgies we track, Stephen Mandel’s Lone Pine Capital had the largest position in O’Reilly Automotive Inc (NASDAQ:ORLY), worth close to $213.7 million, accounting for 1.1% of its total 13F portfolio. The second largest stake is held by Select Equity Group, managed by Robert Joseph Caruso, which held a $211.9 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Other peers that hold long positions include D. E. Shaw’s D E Shaw, Jason Capello’s Merchants’ Gate Capital and Mario Gabelli’s GAMCO Investors.

Now, key hedge funds were leading the bulls’ herd. First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, created the most valuable position in O’Reilly Automotive Inc (NASDAQ:ORLY). First Pacific Advisors LLC had 82.9 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $16.5 million position during the quarter. The other funds with brand new ORLY positions are Van Schreiber’s Bennett Lawrence Management, Noam Gottesman’s GLG Partners, and John Overdeck and David Siegel’s Two Sigma Advisors.

What do corporate executives and insiders think about O’Reilly Automotive Inc (NASDAQ:ORLY)?

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time period, O’Reilly Automotive Inc (NASDAQ:ORLY) has experienced zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to O’Reilly Automotive Inc (NASDAQ:ORLY). These stocks are U.S. Auto Parts Network, Inc. (NASDAQ:PRTS), The Pep Boys – Manny, Moe & Jack (NYSE:PBY), Advance Auto Parts, Inc. (NYSE:AAP), , and AutoZone, Inc. (NYSE:AZO). This group of stocks belong to the auto parts stores industry and their market caps are similar to ORLY’s market cap.

With the results exhibited by Insider Monkey’s tactics, retail investors should always keep an eye on hedge fund and insider trading activity, and O’Reilly Automotive Inc (NASDAQ:ORLY) is an important part of this process.

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