Is ADT Corp (NYSE:ADT) a buy right now? Investors who are in the know are becoming less hopeful. The number of bullish hedge fund bets shrunk by 10 recently.
In the financial world, there are dozens of indicators investors can use to monitor stocks. Some of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best fund managers can beat their index-focused peers by a superb amount (see just how much).
Equally as beneficial, bullish insider trading activity is a second way to parse down the world of equities. Obviously, there are a number of motivations for a bullish insider to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this tactic if you know where to look (learn more here).
With all of this in mind, we’re going to take a peek at the latest action surrounding ADT Corp (NYSE:ADT).
Hedge fund activity in ADT Corp (NYSE:ADT)
At Q1’s end, a total of 56 of the hedge funds we track held long positions in this stock, a change of -15% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully.
When looking at the hedgies we track, Corvex Capital, managed by Keith Meister, holds the biggest position in ADT Corp (NYSE:ADT). Corvex Capital has a $546.5 million position in the stock, comprising 16% of its 13F portfolio. Coming in second is Sean Cullinan of Point State Capital, with a $192.5 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include David Cohen and Harold Levy’s Iridian Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D. E. Shaw’s D E Shaw.
Judging by the fact that ADT Corp (NYSE:ADT) has experienced declining sentiment from the smart money, we can see that there were a few funds that elected to cut their positions entirely heading into Q2. At the top of the heap, Doug Silverman and Alexander Klabin’s Senator Investment Group cut the largest stake of all the hedgies we monitor, comprising an estimated $204.1 million in stock., and Barry Rosenstein of JANA Partners was right behind this move, as the fund dropped about $118.2 million worth. These moves are interesting, as total hedge fund interest was cut by 10 funds heading into Q2.
How have insiders been trading ADT Corp (NYSE:ADT)?
Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time period, ADT Corp (NYSE:ADT) has experienced 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to ADT Corp (NYSE:ADT). These stocks are Checkpoint Systems, Inc. (NYSE:CKP), Ascent Capital Group Inc (NASDAQ:ASCMA), Brink’S Co (NYSE:BCO), The Geo Group, Inc. (NYSE:GEO), and Tyco International Ltd. (NYSE:TYC). This group of stocks are in the security & protection services industry and their market caps are closest to ADT’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Checkpoint Systems, Inc. (NYSE:CKP) | 15 | 1 | 0 |
| Ascent Capital Group Inc (NASDAQ:ASCMA) | 16 | 1 | 0 |
| Brink’S Co (NYSE:BCO) | 17 | 0 | 2 |
| The Geo Group, Inc. (NYSE:GEO) | 20 | 0 | 11 |
| Tyco International Ltd. (NYSE:TYC) | 45 | 1 | 0 |
With the returns exhibited by the aforementioned time-tested strategies, everyday investors must always monitor hedge fund and insider trading sentiment, and ADT Corp (NYSE:ADT) is no exception.
