Is Polaris Industries Inc. (PII) Going to Burn These Hedge Funds?

Polaris Industries Inc. (NYSE:PII) shareholders have witnessed a decrease in hedge fund sentiment in recent months.

At the moment, there are dozens of gauges shareholders can use to track Mr. Market. Some of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite investment managers can trounce the market by a superb margin (see just how much).

Just as integral, optimistic insider trading activity is another way to parse down the investments you’re interested in. Just as you’d expect, there are many reasons for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this tactic if shareholders understand what to do (learn more here).

With these “truths” under our belt, let’s take a glance at the recent action encompassing Polaris Industries Inc. (NYSE:PII).

What does the smart money think about Polaris Industries Inc. (NYSE:PII)?

In preparation for this quarter, a total of 23 of the hedge funds we track were bullish in this stock, a change of -18% from the first quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly.

When looking at the hedgies we track, Rob Citrone’s Discovery Capital Management had the biggest position in Polaris Industries Inc. (NYSE:PII), worth close to $70.7 million, accounting for 0.9% of its total 13F portfolio. The second largest stake is held by Robert B. Gillam of McKinley Capital Management, with a $37.5 million position; 1.7% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include David Keidan’s Buckingham Capital Management, Steven Cohen’s SAC Capital Advisors and Jim Simons’s Renaissance Technologies.

Judging by the fact that Polaris Industries Inc. (NYSE:PII) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q2. At the top of the heap, Daniel S. Och’s OZ Management sold off the largest position of all the hedgies we monitor, valued at about $42.1 million in call options, and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund dumped about $4.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds heading into Q2.

How are insiders trading Polaris Industries Inc. (NYSE:PII)?

Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past six months. Over the latest 180-day time period, Polaris Industries Inc. (NYSE:PII) has seen zero unique insiders buying, and 5 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 Polaris Industries Inc. (NYSE:PII). These stocks are Arctic Cat Inc (NASDAQ:ACAT), Winnebago Industries, Inc. (NYSE:WGO), Drew Industries, Inc. (NYSE:DW), Thor Industries, Inc. (NYSE:THO), and Harley-Davidson, Inc. (NYSE:HOG). This group of stocks are the members of the recreational vehicles industry and their market caps are similar to PII’s market cap.