Sears Holdings Corporation (NASDAQ:SHLD) investors should pay attention to a decrease in support from the world’s most elite money managers recently.
If you’d ask most stock holders, hedge funds are viewed as worthless, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the elite of this club, close to 450 funds. Most estimates calculate that this group oversees most of the smart money’s total asset base, and by watching their best equity investments, we have uncovered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as key, optimistic insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are lots of reasons for an insider to get rid of shares of his or her company, but just one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if “monkeys” understand where to look (learn more here).
Keeping this in mind, we’re going to take a gander at the key action encompassing Sears Holdings Corporation (NASDAQ:SHLD).
What have hedge funds been doing with Sears Holdings Corporation (NASDAQ:SHLD)?
In preparation for this quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of -5% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially.
According to our comprehensive database, Edward Lampert’s ESL Investments had the largest position in Sears Holdings Corporation (NASDAQ:SHLD), worth close to $1.6918 billion, comprising 42% of its total 13F portfolio. On ESL Investments’s heels is Bruce Berkowitz of Fairholme (FAIRX), with a $974.9 million position; 12.4% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Robert Jaffe’s Force Capital, Debra Fine’s Fine Capital Partners and Francis Chou’s Chou Associates Management.
Due to the fact that Sears Holdings Corporation (NASDAQ:SHLD) has faced falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedgies who were dropping their entire stakes in Q1. Intriguingly, Murray Stahl’s Horizon Asset Management said goodbye to the largest investment of the “upper crust” of funds we track, totaling about $74.9 million in stock., and Rob Butts and Josh Clark of Southpoint Capital Advisors was right behind this move, as the fund cut about $13.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds in Q1.
What do corporate executives and insiders think about Sears Holdings Corporation (NASDAQ:SHLD)?
Bullish insider trading is most useful when the company in question has seen transactions within the past six months. Over the latest half-year time period, Sears Holdings Corporation (NASDAQ:SHLD) has experienced 2 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Sears Holdings Corporation (NASDAQ:SHLD). These stocks are Macy’s, Inc. (NYSE:M), Saks Inc (NYSE:SKS), Kohl’s Corporation (NYSE:KSS), J.C. Penney Company, Inc. (NYSE:JCP), and Dillard’s, Inc. (NYSE:DDS). This group of stocks belong to the department stores industry and their market caps are similar to SHLD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Macy’s, Inc. (NYSE:M) | 39 | 1 | 15 |
| Saks Inc (NYSE:SKS) | 13 | 0 | 6 |
| Kohl’s Corporation (NYSE:KSS) | 23 | 1 | 3 |
| J.C. Penney Company, Inc. (NYSE:JCP) | 36 | 0 | 2 |
| Dillard’s, Inc. (NYSE:DDS) | 21 | 0 | 3 |
With the results shown by our studies, retail investors should always keep an eye on hedge fund and insider trading activity, and Sears Holdings Corporation (NASDAQ:SHLD) shareholders fit into this picture quite nicely.
