To most stock holders, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are over 8000 funds trading today, we look at the leaders of this club, around 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total asset base, and by paying attention to their best equity investments, we have uncovered a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as important, bullish insider trading sentiment is a second way to break down the marketplace. There are many stimuli for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this strategy if piggybackers know what to do (learn more here).
With these “truths” under our belt, we’re going to take a gander at the latest action encompassing Yahoo! Inc. (NASDAQ:YHOO).
How have hedgies been trading Yahoo! Inc. (NASDAQ:YHOO)?
At the end of the first quarter, a total of 66 of the hedge funds we track were long in this stock, a change of -7% from the previous quarter.
Because Yahoo! Inc. (NASDAQ:YHOO) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there were a few fund managers that decided to sell off their full holdings last quarter. It’s worth mentioning that Chase Coleman and Feroz Dewan’s Tiger Global Management LLC said goodbye to the biggest investment of the “upper crust” of funds we track, totaling about $278.6 million in stock.. James Dinan’s fund, York Capital Management, also sold off its stock, about $125.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds last quarter.
How have insiders been trading Yahoo! Inc. (NASDAQ:YHOO)?
Insider purchases made by high-level executives is at its handiest when the company in focus has seen transactions within the past six months. Over the last six-month time frame, Yahoo! Inc. (NASDAQ:YHOO) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Yahoo! Inc. (NASDAQ:YHOO). These stocks are Tripadvisor Inc (NASDAQ:TRIP), Yandex NV (NASDAQ:YNDX), Facebook Inc (NASDAQ:FB), LinkedIn Corp (NYSE:LNKD), and Baidu.com, Inc. (ADR) (NASDAQ:BIDU). This group of stocks are in the internet information providers industry and their market caps match YHOO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Tripadvisor Inc (NASDAQ:TRIP) | 41 | 1 | 1 |
| Yandex NV (NASDAQ:YNDX) | 23 | 0 | 0 |
| Facebook Inc (NASDAQ:FB) | 49 | 0 | 9 |
| LinkedIn Corp (NYSE:LNKD) | 40 | 0 | 13 |
| Baidu.com, Inc. (ADR) (NASDAQ:BIDU) | 29 | 0 | 0 |
With the results shown by the aforementioned time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Yahoo! Inc. (NASDAQ:YHOO) is an important part of this process.
