Is Zillow Inc (NASDAQ:Z) a buy?
If you were to ask many traders, hedge funds are viewed as delayed, old financial tools of an era lost to time. Although there are over 8,000 hedge funds with their doors open in present day, this site focuses on the crème de la crème of this club, close to 525 funds. It is assumed that this group oversees most of the hedge fund industry’s total capital, and by keeping an eye on their best investments, we’ve formulated a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 33 percentage points in 11 months (find the details here).
Just as key, positive insider trading activity is another way to analyze the stock market universe. As the old adage goes: there are lots of stimuli for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).
Now that that’s out of the way, it’s important to study the newest info surrounding Zillow Inc (NASDAQ:Z).
What have hedge funds been doing with Zillow Inc (NASDAQ:Z)?
Heading into Q3, a total of 10 of the hedge funds we track held long positions in this stock, a change of -17% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially.
Out of the hedge funds we follow, Valinor Management LLC, managed by David Gallo, holds the biggest position in Zillow Inc (NASDAQ:Z). Valinor Management LLC has a $28.6 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Donald Chiboucis of Columbus Circle Investors, with a $21.8 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Alok Agrawal’s Bloom Tree Partners, and D. E. Shaw’s D E Shaw.
Due to the fact Zillow Inc (NASDAQ:Z) has experienced declining interest from the top-tier hedge fund industry, it’s easy to see that there were a few fund managers who sold off their entire stakes heading into Q2. At the top of the heap, James Crichton and Adam Weiss’s Scout Capital Management sold off the biggest position of the 450+ funds we track, worth about $38.3 million in stock. Paul ReederáandáEdward Shapiro’s fund, PAR Capital Management, also sold off its stock, about $28.1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds heading into Q2.
How have insiders been trading Zillow Inc (NASDAQ:Z)?
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past six months. Over the last half-year time frame, Zillow Inc (NASDAQ:Z) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Zillow Inc (NASDAQ:Z). These stocks are Portfolio Recovery Associates, Inc. (NASDAQ:PRAA), Fair Isaac Corporation (NYSE:FICO), Deluxe Corporation (NYSE:DLX), Healthcare Services Group, Inc. (NASDAQ:HCSG), and The Advisory Board Company (NASDAQ:ABCO). This group of stocks belong to the business services industry and their market caps match Z’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Portfolio Recovery Associates, Inc. (NASDAQ:PRAA) | 10 | 0 | 0 |
| Fair Isaac Corporation (NYSE:FICO) | 15 | 0 | 0 |
| Deluxe Corporation (NYSE:DLX) | 16 | 0 | 0 |
| Healthcare Services Group, Inc. (NASDAQ:HCSG) | 7 | 0 | 0 |
| The Advisory Board Company (NASDAQ:ABCO) | 8 | 0 | 0 |
Using the returns demonstrated by the previously mentioned analyses, average investors should always pay attention to hedge fund and insider trading activity, and Zillow Inc (NASDAQ:Z) applies perfectly to this mantra.
