Hedge Funds Are Betting On SUPERVALU INC. (SVU)

Is SUPERVALU INC. (NYSE:SVU) worth your attention right now? Money managers are in a bullish mood. The number of long hedge fund bets increased by 11 lately.

If you’d ask most shareholders, hedge funds are assumed to be unimportant, outdated financial vehicles of the past. While there are more than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the bigwigs of this group, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the hedge fund industry’s total asset base, and by monitoring their best stock picks, we have come up with a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as integral, bullish insider trading activity is another way to break down the investments you’re interested in. Obviously, there are a variety of reasons for a corporate insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the useful potential of this method if investors know where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the latest action encompassing SUPERVALU INC. (NYSE:SVU).

What does the smart money think about SUPERVALU INC. (NYSE:SVU)?

At the end of the first quarter, a total of 34 of the hedge funds we track were bullish in this stock, a change of 48% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly.

When looking at the hedgies we track, JANA Partners, managed by Barry Rosenstein, holds the largest position in SUPERVALU INC. (NYSE:SVU). JANA Partners has a $71.2 million position in the stock, comprising 1.5% of its 13F portfolio. Coming in second is Brigade Capital, managed by Don Morgan, which held a $36.1 million position; 2.4% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include Leon Cooperman’s Omega Advisors, Glenn J. Krevlin’s Glenhill Advisors and Steven Cohen’s SAC Capital Advisors.

As industrywide interest jumped, key money managers were leading the bulls’ herd. JANA Partners, managed by Barry Rosenstein, assembled the largest position in SUPERVALU INC. (NYSE:SVU). JANA Partners had 71.2 million invested in the company at the end of the quarter. Leon Cooperman’s Omega Advisors also initiated a $34.6 million position during the quarter. The following funds were also among the new SVU investors: Glenn J. Krevlin’s Glenhill Advisors, SAC Subsidiary’s Sigma Capital Management, and Howard Guberman’s Gruss Asset Management.

How have insiders been trading SUPERVALU INC. (NYSE:SVU)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has seen transactions within the past six months. Over the last six-month time period, SUPERVALU INC. (NYSE:SVU) has seen zero unique insiders purchasing, and 1 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 SUPERVALU INC. (NYSE:SVU). These stocks are The Fresh Market Inc (NASDAQ:TFM), Core-Mark Holding Company, Inc. (NASDAQ:CORE), Village Super Market, Inc. (NASDAQ:VLGEA), Weis Markets, Inc. (NYSE:WMK), and Susser Holdings Corporation (NYSE:SUSS). This group of stocks are the members of the grocery stores industry and their market caps are closest to SVU’s market cap.

With the returns shown by the aforementioned tactics, retail investors should always pay attention to hedge fund and insider trading sentiment, and SUPERVALU INC. (NYSE:SVU) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds