Hillshire Brands Co (HSH): Hedge Funds and Insiders Are Bearish, What Should You Do?

Hillshire Brands Co (NYSE:HSH) investors should pay attention to a decrease in support from the world’s most elite money managers of late.

In the eyes of most traders, hedge funds are viewed as slow, outdated financial vehicles of the past. While there are more than 8000 funds with their doors open today, we at Insider Monkey hone in on the moguls of this club, about 450 funds. It is widely believed that this group oversees the majority of the smart money’s total capital, and by paying attention to their best equity investments, we have determined a number of investment strategies that have historically beaten Mr. 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, bullish insider trading activity is another way to break down the investments you’re interested in. There are lots of motivations for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this method if piggybackers understand where to look (learn more here).

Consequently, we’re going to take a gander at the latest action surrounding Hillshire Brands Co (NYSE:HSH).

How are hedge funds trading Hillshire Brands Co (NYSE:HSH)?

At the end of the first quarter, a total of 32 of the hedge funds we track were long in this stock, a change of -9% from the first quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Perry Capital, managed by Richard Perry, holds the largest position in Hillshire Brands Co (NYSE:HSH). Perry Capital has a $203.9 million position in the stock, comprising 6.5% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which held a $120.2 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include John Paulson’s Paulson & Co, Mario Gabelli’s GAMCO Investors and D. E. Shaw’s D E Shaw.

Seeing as Hillshire Brands Co (NYSE:HSH) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that decided to sell off their positions entirely heading into Q2. At the top of the heap, Dan Loeb’s Third Point dumped the biggest stake of the 450+ funds we monitor, worth an estimated $76 million in stock.. John Lykouretzos’s fund, Hoplite Capital Management, also said goodbye to its call options., about $57 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds heading into Q2.

What do corporate executives and insiders think about Hillshire Brands Co (NYSE:HSH)?

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past six months. Over the last half-year time period, Hillshire Brands Co (NYSE:HSH) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned tactics, everyday investors should always monitor hedge fund and insider trading activity, and Hillshire Brands Co (NYSE:HSH) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds