Franklin Resources, Inc. (NYSE:BEN) has seen a decrease in enthusiasm from smart money lately.
According to most shareholders, hedge funds are seen as underperforming, outdated financial vehicles of years past. While there are over 8000 funds in operation at present, we hone in on the masters of this group, about 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total asset base, and by monitoring their top investments, we have identified a number of investment strategies that have historically outpaced the S&P 500 index. 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as key, optimistic insider trading activity is another way to parse down the financial markets. Just as you’d expect, there are a number of incentives for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this strategy if investors understand where to look (learn more here).
Keeping this in mind, we’re going to take a gander at the key action surrounding Franklin Resources, Inc. (NYSE:BEN).
What have hedge funds been doing with Franklin Resources, Inc. (NYSE:BEN)?
At the end of the first quarter, a total of 32 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly.
When looking at the hedgies we track, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in Franklin Resources, Inc. (NYSE:BEN). Pzena Investment Management has a $212.5 million position in the stock, comprising 1.5% of its 13F portfolio. The second largest stake is held by Jonathon Jacobson of Highfields Capital Management, with a $172.3 million position; 1.6% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include David Winters’s Wintergreen Advisers, Ken Griffin’s Citadel Investment Group and Ricky Sandler’s Eminence Capital.
Judging by the fact that Franklin Resources, Inc. (NYSE:BEN) has experienced a declination in interest from hedge fund managers, it’s safe to say that there exists a select few hedge funds that elected to cut their full holdings at the end of the first quarter. At the top of the heap, Mason Hawkins’s Southeastern Asset Management sold off the largest stake of the “upper crust” of funds we track, totaling about $510.3 million in stock., and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund dropped about $12.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Franklin Resources, Inc. (NYSE:BEN)?
Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last half-year time frame, Franklin Resources, Inc. (NYSE:BEN) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Franklin Resources, Inc. (NYSE:BEN). These stocks are T. Rowe Price Group, Inc. (NASDAQ:TROW), The Blackstone Group L.P. (NYSE:BX), BlackRock, Inc. (NYSE:BLK), State Street Corporation (NYSE:STT), and The Bank of New York Mellon Corporation (NYSE:BK). This group of stocks are in the asset management industry and their market caps resemble BEN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| T. Rowe Price Group, Inc. (NASDAQ:TROW) | 24 | 0 | 4 |
| The Blackstone Group L.P. (NYSE:BX) | 30 | 0 | 2 |
| BlackRock, Inc. (NYSE:BLK) | 32 | 2 | 6 |
| State Street Corporation (NYSE:STT) | 38 | 0 | 7 |
| The Bank of New York Mellon Corporation (NYSE:BK) | 34 | 0 | 9 |
With the results exhibited by our tactics, everyday investors should always watch hedge fund and insider trading sentiment, and Franklin Resources, Inc. (NYSE:BEN) applies perfectly to this mantra.
