Mercadolibre Inc (MELI): Insiders Aren’t Crazy About It

Mercadolibre Inc (NASDAQ:MELI) shareholders have witnessed a decrease in hedge fund sentiment of late.

If you’d ask most investors, hedge funds are viewed as underperforming, old investment tools of years past. While there are greater than 8000 funds trading at present, we at Insider Monkey hone in on the top tier of this group, around 450 funds. Most estimates calculate that this group has its hands on the lion’s share of the smart money’s total asset base, and by watching their top picks, we have determined a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as important, optimistic insider trading activity is a second way to break down the stock market universe. As the old adage goes: there are a variety of reasons for an executive to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Several empirical studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).

Consequently, it’s important to take a glance at the latest action surrounding Mercadolibre Inc (NASDAQ:MELI).

How have hedgies been trading Mercadolibre Inc (NASDAQ:MELI)?

Heading into Q2, a total of 7 of the hedge funds we track held long positions in this stock, a change of -30% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially.

When looking at the hedgies we track, William B. Gray’s Orbis Investment Management had the biggest position in Mercadolibre Inc (NASDAQ:MELI), worth close to $92 million, comprising 0.8% of its total 13F portfolio. Coming in second is Josh Resnick of Jericho Capital Asset Management, with a $24.9 million position; 2.6% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Matthew Hulsizer’s PEAK6 Capital Management, Christopher Lord’s Criterion Capital and Ken Griffin’s Citadel Investment Group.

Since Mercadolibre Inc (NASDAQ:MELI) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers who sold off their full holdings heading into Q2. Intriguingly, Richard Driehaus’s Driehaus Capital said goodbye to the biggest stake of all the hedgies we key on, worth about $7.1 million in stock.. David Blood and Al Gore’s fund, Generation Investment Management, also dumped its stock, about $6.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds heading into Q2.

What have insiders been doing with Mercadolibre Inc (NASDAQ:MELI)?

Insider buying is best served when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, Mercadolibre Inc (NASDAQ:MELI) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Mercadolibre Inc (NASDAQ:MELI). These stocks are E Commerce China Dangdang Inc (ADR) (NYSE:DANG), Stamps.com Inc. (NASDAQ:STMP), PC Connection, Inc. (NASDAQ:PCCC), Liquidity Services, Inc. (NASDAQ:LQDT), and Liberty Interactive (Interactive group) (NASDAQ:LINTA). All of these stocks are in the catalog & mail order houses industry and their market caps are similar to MELI’s market cap.

With the results shown by the aforementioned tactics, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Mercadolibre Inc (NASDAQ:MELI) shareholders fit into this picture quite nicely.

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