According to most stock holders, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, we hone in on the crème de la crème of this group, close to 450 funds. It is estimated that this group has its hands on the majority of the hedge fund industry’s total capital, and by tracking their top equity investments, we have figured out a number of investment strategies that have historically outpaced Mr. Market. 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 outpaced the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as integral, positive insider trading activity is a second way to break down the world of equities. Just as you’d expect, there are a variety of stimuli for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this tactic if “monkeys” understand where to look (learn more here).
Keeping this in mind, we’re going to take a gander at the latest action surrounding Engility Holdings Inc (NYSE:EGL).
How are hedge funds trading Engility Holdings Inc (NYSE:EGL)?
Heading into 2013, a total of 8 of the hedge funds we track were bullish in this stock, a change of -38% from the third quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, Abrams Capital Management, managed by David Abrams, holds the biggest position in Engility Holdings Inc (NYSE:EGL). Abrams Capital Management has a $51.2 million position in the stock, comprising 4.6% of its 13F portfolio. On Abrams Capital Management’s heels is Deccan Value Advisors, managed by Vinit Bodas, which held a $29.8 million position; 13.7% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Richard S. Pzena’s Pzena Investment Management, Robert Jaffe’s Force Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Due to the fact that Engility Holdings Inc (NYSE:EGL) has witnessed a declination in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that decided to sell off their full holdings in Q4. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the largest investment of the 450+ funds we key on, totaling an estimated $4.2 million in stock.. Raymond J. Harbert’s fund, Harbert Management, also dumped its stock, about $0.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 5 funds in Q4.
How have insiders been trading Engility Holdings Inc (NYSE:EGL)?
Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past 180 days. Over the latest six-month time period, Engility Holdings Inc (NYSE:EGL) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Engility Holdings Inc (NYSE:EGL). These stocks are CACI International Inc (NYSE:CACI), Michael Baker Corp (NYSEAMEX:BKR), Mistras Group, Inc. (NYSE:MG), and Furmanite Corporation (NYSE:FRM). This group of stocks are the members of the technical services industry and their market caps resemble EGL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| CACI International Inc (NYSE:CACI) | 10 | 1 | 7 |
| Michael Baker Corp (NYSEAMEX:BKR) | 3 | 0 | 0 |
| Mistras Group, Inc. (NYSE:MG) | 4 | 0 | 5 |
| Furmanite Corporation (NYSE:FRM) | 7 | 4 | 0 |
With the returns demonstrated by Insider Monkey’s tactics, retail investors must always watch hedge fund and insider trading activity, and Engility Holdings Inc (NYSE:EGL) shareholders fit into this picture quite nicely.
