Hedge Funds Are Buying The Bon-Ton Stores, Inc. (BONT)

The Bon-Ton Stores, Inc. (NASDAQ:BONT) investors should pay attention to an increase in hedge fund sentiment of late.

To the average investor, there are dozens of gauges shareholders can use to watch their holdings. A pair of the most useful are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite investment managers can outperform their index-focused peers by a superb margin (see just how much).

Just as important, positive insider trading activity is another way to parse down the stock market universe. Just as you’d expect, there are plenty of incentives for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this tactic if investors know what to do (learn more here).

With all of this in mind, let’s take a look at the latest action surrounding The Bon-Ton Stores, Inc. (NASDAQ:BONT).

How have hedgies been trading The Bon-Ton Stores, Inc. (NASDAQ:BONT)?

At the end of the fourth quarter, a total of 7 of the hedge funds we track held long positions in this stock, a change of 40% from the third quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.

Of the funds we track, David Keidan’s Buckingham Capital Management had the most valuable position in The Bon-Ton Stores, Inc. (NASDAQ:BONT), worth close to $8.2 million, accounting for 0.6% of its total 13F portfolio. On Buckingham Capital Management’s heels is Mario Gabelli of GAMCO Investors, with a $7 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Jacob Gottlieb’s Visium Asset Management, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.

Consequently, key money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, established the most valuable position in The Bon-Ton Stores, Inc. (NASDAQ:BONT). D E Shaw had 0.5 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is Cliff Asness’s AQR Capital Management.

Insider trading activity in The Bon-Ton Stores, Inc. (NASDAQ:BONT)

Bullish insider trading is most useful when the company in question has seen transactions within the past half-year. Over the last six-month time frame, The Bon-Ton Stores, Inc. (NASDAQ:BONT) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to The Bon-Ton Stores, Inc. (NASDAQ:BONT). These stocks are Dillard’s, Inc. (NYSE:DDS), J.C. Penney Company, Inc. (NYSE:JCP), Saks Inc (NYSE:SKS), Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS), and Alon Holdings Blue Square Israel Ltd (NYSE:BSI). This group of stocks are the members of the department stores industry and their market caps resemble BONT’s market cap.

With the returns demonstrated by the aforementioned time-tested strategies, retail investors must always watch hedge fund and insider trading sentiment, and The Bon-Ton Stores, Inc. (NASDAQ:BONT) is no exception.

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