If you’d ask most shareholders, hedge funds are perceived as worthless, outdated financial tools of the past. While there are over 8000 funds in operation today, we at Insider Monkey hone in on the leaders of this group, about 450 funds. It is widely believed that this group oversees the lion’s share of the smart money’s total capital, and by watching their highest performing equity investments, we have determined a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed 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 outclassed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as beneficial, bullish insider trading sentiment is a second way to break down the investments you’re interested in. There are lots of reasons for an executive to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this strategy if investors understand where to look (learn more here).
Now, let’s take a gander at the key action regarding WEX Inc (NYSE:WXS).
What does the smart money think about WEX Inc (NYSE:WXS)?
Heading into 2013, a total of 5 of the hedge funds we track were long in this stock, a change of -17% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially.
Of the funds we track, Mariko Gordon’s Daruma Asset Management had the most valuable position in WEX Inc (NYSE:WXS), worth close to $70.6 million, accounting for 4.2% of its total 13F portfolio. On Daruma Asset Management’s heels is Millennium Management, managed by Israel Englander, which held a $8.9 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Ken Griffin’s Citadel Investment Group, Steven Cohen’s SAC Capital Advisors and Cliff Asness’s AQR Capital Management.
Because WEX Inc (NYSE:WXS) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers who were dropping their positions entirely last quarter. Intriguingly, Glenn Fuhrman and John Phelan’s MSD Capital dropped the biggest stake of the 450+ funds we monitor, valued at about $77.3 million in stock.. Mariko Gordon’s fund, Daruma Asset Management, also dropped its stock, about $67.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.
How have insiders been trading WEX Inc (NYSE:WXS)?
Insider buying is most useful when the company in focus has seen transactions within the past 180 days. Over the latest six-month time frame, WEX Inc (NYSE:WXS) has experienced zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to WEX Inc (NYSE:WXS). These stocks are Global Payments Inc (NYSE:GPN), HMS Holdings Corp. (NASDAQ:HMSY), Rollins, Inc. (NYSE:ROL), athenahealth, Inc (NASDAQ:ATHN), and MAXIMUS, Inc. (NYSE:MMS). This group of stocks are in the business services industry and their market caps are similar to WXS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Global Payments Inc (NYSE:GPN) | 26 | 0 | 3 |
| HMS Holdings Corp. (NASDAQ:HMSY) | 8 | 0 | 9 |
| Rollins, Inc. (NYSE:ROL) | 12 | 0 | 2 |
| athenahealth, Inc (NASDAQ:ATHN) | 13 | 0 | 4 |
| MAXIMUS, Inc. (NYSE:MMS) | 12 | 0 | 11 |
With the results shown by the aforementioned research, retail investors must always watch hedge fund and insider trading sentiment, and WEX Inc (NYSE:WXS) shareholders fit into this picture quite nicely.
