Hedge Funds Aren’t Crazy About The Bon-Ton Stores, Inc. (BONT) Anymore

Is The Bon-Ton Stores, Inc. (NASDAQ:BONT) undervalued? Prominent investors are getting less bullish. The number of long hedge fund bets decreased by 1 in recent months.

In the eyes of most shareholders, hedge funds are seen as underperforming, outdated investment tools of years past. While there are more than 8000 funds in operation today, we at Insider Monkey hone in on the elite of this club, about 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total asset base, and by paying attention to their highest performing picks, we have spotted a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as integral, positive insider trading sentiment is another way to parse down the marketplace. Obviously, there are plenty of reasons for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this method if piggybackers understand where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the latest action regarding The Bon-Ton Stores, Inc. (NASDAQ:BONT).

What does the smart money think about The Bon-Ton Stores, Inc. (NASDAQ:BONT)?

At Q1’s end, a total of 6 of the hedge funds we track were bullish in this stock, a change of -14% from the first quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the biggest position in The Bon-Ton Stores, Inc. (NASDAQ:BONT), worth close to $7.5 million, comprising less than 0.1%% of its total 13F portfolio. On GAMCO Investors’s heels is David Keidan of Buckingham Capital Management, with a $5.3 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Charles Davidson’s Wexford Capital, Jacob Gottlieb’s Visium Asset Management and Ken Griffin’s Citadel Investment Group.

Seeing as The Bon-Ton Stores, Inc. (NASDAQ:BONT) has faced bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few funds that elected to cut their full holdings last quarter. At the top of the heap, D. E. Shaw’s D E Shaw dumped the largest position of the 450+ funds we track, valued at about $0.5 million in stock., and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund sold off about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

How are insiders trading The Bon-Ton Stores, Inc. (NASDAQ:BONT)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time period, The Bon-Ton Stores, Inc. (NASDAQ:BONT) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to The Bon-Ton Stores, Inc. (NASDAQ:BONT). These stocks are Dillard’s, Inc. (NYSE:DDS), J.C. Penney Company, Inc. (NYSE:JCP), Saks Inc (NYSE:SKS), Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS), and Alon Holdings Blue Square Israel Ltd (NYSE:BSI). This group of stocks are in the department stores industry and their market caps are closest to BONT’s market cap.