Hedge Funds Are Dumping PriceSmart, Inc. (PSMT)

PriceSmart, Inc. (NASDAQ:PSMT) investors should pay attention to a decrease in enthusiasm from smart money lately.

To most stock holders, hedge funds are perceived as worthless, old investment tools of yesteryear. While there are more than 8000 funds trading today, we at Insider Monkey hone in on the leaders of this club, around 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total asset base, and by paying attention to their highest performing investments, we have figured out a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, bullish insider trading activity is a second way to parse down the financial markets. There are many motivations for an insider to sell shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the impressive potential of this method if you know what to do (learn more here).

Now, we’re going to take a peek at the recent action encompassing PriceSmart, Inc. (NASDAQ:PSMT).

Hedge fund activity in PriceSmart, Inc. (NASDAQ:PSMT)

Heading into Q2, a total of 7 of the hedge funds we track held long positions in this stock, a change of -13% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully.

Of the funds we track, Matthew Hulsizer’s PEAK6 Capital Management had the biggest call position in PriceSmart, Inc. (NASDAQ:PSMT), worth close to $2.7 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management.

Due to the fact that PriceSmart, Inc. (NASDAQ:PSMT) has faced a declination in interest from hedge fund managers, we can see that there exists a select few hedgies who sold off their entire stakes heading into Q2. Interestingly, Richard Driehaus’s Driehaus Capital dumped the biggest position of the “upper crust” of funds we monitor, comprising an estimated $8.6 million in stock.. Andy Redleaf’s fund, Whitebox Advisors, also dumped its stock, about $0.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds heading into Q2.

What have insiders been doing with PriceSmart, Inc. (NASDAQ:PSMT)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the last six-month time frame, PriceSmart, Inc. (NASDAQ:PSMT) has seen zero unique insiders buying, and 7 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to PriceSmart, Inc. (NASDAQ:PSMT). These stocks are Dollar General Corp. (NYSE:DG), Fred’s, Inc. (NASDAQ:FRED), Dollar Tree, Inc. (NASDAQ:DLTR), Family Dollar Stores, Inc. (NYSE:FDO), and Big Lots, Inc. (NYSE:BIG). All of these stocks are in the discount, variety stores industry and their market caps are similar to PSMT’s market cap.

With the returns exhibited by our tactics, retail investors must always monitor hedge fund and insider trading activity, and PriceSmart, Inc. (NASDAQ:PSMT) is no exception.

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