Hedge Funds Are Betting On Safeway Inc. (SWY)

Safeway Inc. (NYSE:SWY) investors should pay attention to an increase in hedge fund sentiment of late.

At the moment, there are dozens of gauges investors can use to analyze Mr. Market. A couple of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the market by a solid amount (see just how much).

Equally as important, optimistic insider trading activity is another way to parse down the stock market universe. There are a number of stimuli for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).

With all of this in mind, we’re going to take a look at the recent action regarding Safeway Inc. (NYSE:SWY).

What does the smart money think about Safeway Inc. (NYSE:SWY)?

In preparation for this quarter, a total of 28 of the hedge funds we track were bullish in this stock, a change of 27% from the first quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly.

Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Safeway Inc. (NYSE:SWY). Citadel Investment Group has a $75.1 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Vertex One Asset Management, managed by John Thiessen, which held a $44.3 million position; the fund has 6.1% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Greg Boland’s West Face Capital, Ron Gutfleish’s Elm Ridge Capital and Scott Scher & Michael Prober’s Clovis Capital Management.

As one would reasonably expect, key money managers were leading the bulls’ herd. Vertex One Asset Management, managed by John Thiessen, assembled the largest position in Safeway Inc. (NYSE:SWY). Vertex One Asset Management had 44.3 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $23.4 million investment in the stock during the quarter. The following funds were also among the new SWY investors: David Costen Haley’s HBK Investments, D. E. Shaw’s D E Shaw, and Ken Heebner’s Capital Growth Management.

What do corporate executives and insiders think about Safeway Inc. (NYSE:SWY)?

Insider buying is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time period, Safeway Inc. (NYSE:SWY) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Safeway Inc. (NYSE:SWY). These stocks are Casey’s General Stores, Inc. (NASDAQ:CASY), The Kroger Co. (NYSE:KR), Whole Foods Market, Inc. (NASDAQ:WFM), Companhia Brasileira de Distrib. (ADR) (NYSE:CBD), and Delhaize Group (ADR) (NYSE:DEG). All of these stocks are in the grocery stores industry and their market caps are closest to SWY’s market cap.