LPL Financial Holdings Inc (NASDAQ:LPLA) shareholders have witnessed an increase in hedge fund interest lately.
If you’d ask most stock holders, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are over 8000 funds trading at the moment, we at Insider Monkey choose to focus on the aristocrats of this club, close to 450 funds. It is estimated that this group controls most of all hedge funds’ total capital, and by paying attention to their top picks, we have unearthed a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as key, optimistic insider trading activity is another way to break down the marketplace. Just as you’d expect, there are lots of motivations for an executive to downsize shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the impressive potential of this strategy if you understand what to do (learn more here).
With these “truths” under our belt, it’s important to take a look at the recent action surrounding LPL Financial Holdings Inc (NASDAQ:LPLA).
What does the smart money think about LPL Financial Holdings Inc (NASDAQ:LPLA)?
At year’s end, a total of 12 of the hedge funds we track were bullish in this stock, a change of 9% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly.
Of the funds we track, Akre Capital Management, managed by Charles Akre, holds the most valuable position in LPL Financial Holdings Inc (NASDAQ:LPLA). Akre Capital Management has a $47.9 million position in the stock, comprising 3.4% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $45.1 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Richard Chilton’s Chilton Investment Company, James A. Noonan’s Pivot Point Capital and Steven Cohen’s SAC Capital Advisors.
As industrywide interest jumped, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the largest position in LPL Financial Holdings Inc (NASDAQ:LPLA). Millennium Management had 2 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $0.6 million position during the quarter. The only other fund with a brand new LPLA position is John Overdeck and David Siegel’s Two Sigma Advisors.
What have insiders been doing with LPL Financial Holdings Inc (NASDAQ:LPLA)?
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the latest six-month time frame, LPL Financial Holdings Inc (NASDAQ:LPLA) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to LPL Financial Holdings Inc (NASDAQ:LPLA). These stocks are BGC Partners, Inc. (NASDAQ:BGCP), Interactive Brokers Group, Inc. (NASDAQ:IBKR), TD Ameritrade Holding Corp. (NYSE:AMTD), MarketAxess Holdings Inc. (NASDAQ:MKTX), and E TRADE Financial Corporation (NASDAQ:ETFC). This group of stocks are the members of the investment brokerage – national industry and their market caps are closest to LPLA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| BGC Partners, Inc. (NASDAQ:BGCP) | 8 | 0 | 0 |
| Interactive Brokers Group, Inc. (NASDAQ:IBKR) | 11 | 0 | 3 |
| TD Ameritrade Holding Corp. (NYSE:AMTD) | 13 | 2 | 6 |
| MarketAxess Holdings Inc. (NASDAQ:MKTX) | 7 | 0 | 3 |
| E TRADE Financial Corporation (NASDAQ:ETFC) | 30 | 0 | 1 |
With the results demonstrated by our research, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and LPL Financial Holdings Inc (NASDAQ:LPLA) is an important part of this process.
