Is Six Flags Entertainment Corp (SIX) Going to Burn These Hedge Funds?

Is Six Flags Entertainment Corp (NYSE:SIX) an excellent investment today? The best stock pickers are reducing their bets on the stock. The number of bullish hedge fund bets were trimmed by 4 in recent months.

To most traders, hedge funds are viewed as underperforming, outdated financial tools of the past. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the crème de la crème of this group, close to 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total capital, and by paying attention to their best investments, we have figured out a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as integral, optimistic insider trading activity is another way to break down the marketplace. Just as you’d expect, there are plenty of incentives for a bullish insider to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).

Keeping this in mind, let’s take a peek at the latest action regarding Six Flags Entertainment Corp (NYSE:SIX).

What does the smart money think about Six Flags Entertainment Corp (NYSE:SIX)?

At the end of the first quarter, a total of 29 of the hedge funds we track were bullish in this stock, a change of -12% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly.

Of the funds we track, H Partners Management, managed by Rehan Jaffer, holds the largest position in Six Flags Entertainment Corp (NYSE:SIX). H Partners Management has a $925.8 million position in the stock, comprising 71.8% of its 13F portfolio. On H Partners Management’s heels is James Crichton and Adam Weiss of Scout Capital Management, with a $138.6 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Peter Adam Hochfelder’s Brahman Capital, Mark Broach’s Manatuck Hill Partners and Amy Minella’s Cardinal Capital.

Judging by the fact that Six Flags Entertainment Corp (NYSE:SIX) has faced declining sentiment from hedge fund managers, logic holds that there were a few hedge funds that elected to cut their positions entirely heading into Q2. Interestingly, Spencer M. Waxman’s Shannon River Fund Management said goodbye to the biggest position of the 450+ funds we track, worth about $20.8 million in stock.. Alex von Furstenberg and Mal Serure’s fund, Arrow Capital Management, also cut its call options., about $18.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 4 funds heading into Q2.

What do corporate executives and insiders think about Six Flags Entertainment Corp (NYSE:SIX)?

Insider purchases made by high-level executives is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, Six Flags Entertainment Corp (NYSE:SIX) has seen 2 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 Six Flags Entertainment Corp (NYSE:SIX). These stocks are Priceline.com Inc (NASDAQ:PCLN), Carnival plc (ADR) (NYSE:CUK), MakeMyTrip Limited (NASDAQ:MMYT), Orbitz Worldwide, Inc. (NYSE:OWW), and Cedar Fair, L.P. (NYSE:FUN). All of these stocks are in the general entertainment industry and their market caps match SIX’s market cap.

With the results demonstrated by our tactics, everyday investors should always keep an eye on hedge fund and insider trading activity, and Six Flags Entertainment Corp (NYSE:SIX) applies perfectly to this mantra.

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