Here is What Hedge Funds Think About E-House (China) Holdings Limited (ADR) (EJ)

E-House (China) Holdings Limited (ADR) (NYSE:EJ) investors should pay attention to a decrease in hedge fund sentiment lately.

To most market participants, hedge funds are assumed to be underperforming, outdated investment vehicles of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the crème de la crème of this club, close to 450 funds. It is widely believed that this group has its hands on most of the smart money’s total asset base, and by paying attention to their highest performing stock picks, we have identified a few investment strategies that have historically beaten the 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 started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as beneficial, optimistic insider trading sentiment is a second way to break down the financial markets. There are a variety of reasons for an executive to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).

Now, we’re going to take a look at the key action regarding E-House (China) Holdings Limited (ADR) (NYSE:EJ).

How have hedgies been trading E-House (China) Holdings Limited (ADR) (NYSE:EJ)?

Heading into Q2, a total of 8 of the hedge funds we track were long in this stock, a change of -11% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially.

Of the funds we track, Orbis Investment Management, managed by William B. Gray, holds the most valuable position in E-House (China) Holdings Limited (ADR) (NYSE:EJ). Orbis Investment Management has a $80.2 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Platinum Asset Management, managed by Kerr Neilson, which held a $24.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Chuck Royce’s Royce & Associates, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

Because E-House (China) Holdings Limited (ADR) (NYSE:EJ) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Philip Hempleman’s Ardsley Partners cut the largest position of all the hedgies we track, totaling close to $0.1 million in stock.. Matthew Tewksbury’s fund, Stevens Capital Management, also cut its stock, about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

How have insiders been trading E-House (China) Holdings Limited (ADR) (NYSE:EJ)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time period, E-House (China) Holdings Limited (ADR) (NYSE:EJ) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the results exhibited by our research, everyday investors should always keep an eye on hedge fund and insider trading activity, and E-House (China) Holdings Limited (ADR) (NYSE:EJ) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds