Is Farmer Brothers Co. (FARM) Going to Burn These Hedge Funds?

Farmer Brothers Co. (NASDAQ:FARM) has seen a decrease in hedge fund sentiment of late.

In the 21st century investor’s toolkit, there are tons of metrics market participants can use to track stocks. A couple of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can trounce their index-focused peers by a very impressive margin (see just how much).

Just as integral, bullish insider trading sentiment is a second way to break down the financial markets. Just as you’d expect, there are many incentives for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).

Keeping this in mind, it’s important to take a peek at the latest action surrounding Farmer Brothers Co. (NASDAQ:FARM).

How have hedgies been trading Farmer Brothers Co. (NASDAQ:FARM)?

At Q1’s end, a total of 8 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Farmer Brothers Co. (NASDAQ:FARM), worth close to $8.7 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is MFP Investors, managed by Michael Price, which held a $5.4 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Mark Broach’s Manatuck Hill Partners and Israel Englander’s Millennium Management.

Because Farmer Brothers Co. (NASDAQ:FARM) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers who were dropping their positions entirely last quarter. Intriguingly, Joseph A. Jolson’s Harvest Capital Strategies said goodbye to the largest position of the “upper crust” of funds we key on, comprising an estimated $1.4 million in stock. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Farmer Brothers Co. (NASDAQ:FARM)

Insider purchases made by high-level executives is particularly usable when the company in question has seen transactions within the past six months. Over the latest half-year time period, Farmer Brothers Co. (NASDAQ:FARM) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

With the returns exhibited by our tactics, retail investors must always pay attention to hedge fund and insider trading sentiment, and Farmer Brothers Co. (NASDAQ:FARM) is no exception.

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