National Penn Bancshares (NPBC): Insiders Are Buying, Should You?

National Penn Bancshares (NASDAQ:NPBC) was in 11 hedge funds’ portfolio at the end of the first quarter of 2013. NPBC investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 13 hedge funds in our database with NPBC positions at the end of the previous quarter.

To most stock holders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are greater than 8000 funds in operation at present, we at Insider Monkey choose to focus on the crème de la crème of this group, about 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total asset base, and by keeping an eye on their highest performing equity investments, we have brought to light a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as beneficial, bullish insider trading sentiment is a second way to break down the marketplace. There are a number of stimuli 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. Various empirical studies have demonstrated the valuable potential of this strategy if investors understand what to do (learn more here).

With all of this in mind, it’s important to take a glance at the latest action surrounding National Penn Bancshares (NASDAQ:NPBC).

How are hedge funds trading National Penn Bancshares (NASDAQ:NPBC)?

Heading into Q2, a total of 11 of the hedge funds we track were bullish in this stock, a change of -15% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in National Penn Bancshares (NASDAQ:NPBC). Pzena Investment Management has a $28.8 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Diamond Hill Capital, managed by Ric Dillon, which held a $12.9 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Charles Davidson’s Wexford Capital.

Since National Penn Bancshares (NASDAQ:NPBC) has witnessed falling interest from the smart money, we can see that there lies a certain “tier” of money managers who were dropping their entire stakes in Q1. Intriguingly, John Zaro’s Bourgeon Capital dumped the largest stake of the “upper crust” of funds we monitor, comprising an estimated $0.6 million in stock.. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also sold off its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in Q1.

What do corporate executives and insiders think about National Penn Bancshares (NASDAQ:NPBC)?

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past six months. Over the latest 180-day time period, National Penn Bancshares (NASDAQ:NPBC) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to National Penn Bancshares (NASDAQ:NPBC). These stocks are Fulton Financial Corp (NASDAQ:FULT), Susquehanna Bancshares Inc (NASDAQ:SUSQ), Webster Financial Corporation (NYSE:WBS), Community Bank System, Inc. (NYSE:CBU), and Valley National Bancorp (NYSE:VLY). This group of stocks belong to the regional – northeast banks industry and their market caps are similar to NPBC’s market cap.

With the results exhibited by Insider Monkey’s studies, retail investors must always watch hedge fund and insider trading sentiment, and National Penn Bancshares (NASDAQ:NPBC) is no exception.

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