The Kroger Co. (NYSE:KR) investors: pay attention.
To many investors, hedge funds are viewed as bloated, old financial vehicles of an era lost to time. Although there are over 8,000 hedge funds trading today, Insider Monkey looks at the bigwigs of this group, close to 525 funds. It is widely held that this group oversees the majority of the hedge fund industry’s total capital, and by keeping an eye on their highest quality stock picks, we’ve identified a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as key, bullish insider trading activity is a second way to look at the marketplace. Just as you’d expect, there are lots of incentives for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this strategy if you know what to do (learn more here).
Now that that’s out of the way, it’s important to analyze the recent info for The Kroger Co. (NYSE:KR).
How are hedge funds trading The Kroger Co. (NYSE:KR)?
In preparation for the third quarter, a total of 29 of the hedge funds we track were long in this stock, a change of 26% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially.
Consequently, particular hedge funds have jumped into The Kroger Co. (NYSE:KR) headfirst. East Side Capital (RR Partners), managed by Steven Richman, assembled the most outsized position in The Kroger Co. (NYSE:KR). East Side Capital (RR Partners) had 195.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $73.5 million position during the quarter. The following funds were also among the new KR investors: Cliff Asness’s AQR Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and D. E. Shaw’s D E Shaw.
Insider trading activity in The Kroger Co. (NYSE:KR)
Legal insider trading, particularly when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past six months. Over the last six-month time frame, The Kroger Co. (NYSE:KR) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to The Kroger Co. (NYSE:KR). These stocks are Casey’s General Stores, Inc. (NASDAQ:CASY), Delhaize Group (ADR) (NYSE:DEG), Safeway Inc. (NYSE:SWY), Companhia Brasileira de Distrib. (ADR) (NYSE:CBD), and Whole Foods Market, Inc. (NASDAQ:WFM). This group of stocks belong to the grocery stores industry and their market caps are closest to KR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Casey’s General Stores, Inc. (NASDAQ:CASY) | 17 | 0 | 0 |
| Delhaize Group (ADR) (NYSE:DEG) | 4 | 0 | 0 |
| Safeway Inc. (NYSE:SWY) | 30 | 0 | 0 |
| Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) | 10 | 0 | 0 |
| Whole Foods Market, Inc. (NASDAQ:WFM) | 25 | 0 | 0 |
Using the returns demonstrated by Insider Monkey’s strategies, regular investors must always keep one eye on hedge fund and insider trading activity, and The Kroger Co. (NYSE:KR) shareholders fit into this picture quite nicely.
