Orchard Supply Hardware Stores Corp (OSH): Insiders Aren’t Crazy About It

Orchard Supply Hardware Stores Corp (NASDAQ:OSH) was in 5 hedge funds’ portfolio at the end of March. OSH has seen a decrease in enthusiasm from smart money in recent months. There were 6 hedge funds in our database with OSH holdings at the end of the previous quarter.

If you’d ask most investors, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are more than 8000 funds trading at the moment, we choose to focus on the bigwigs of this club, close to 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total asset base, and by monitoring their highest performing picks, we have formulated a number of investment strategies that have historically outpaced 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 started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, positive insider trading sentiment is a second way to parse down the investments you’re interested in. As the old adage goes: there are a variety of stimuli for an executive to drop shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).

Keeping this in mind, it’s important to take a gander at the key action surrounding Orchard Supply Hardware Stores Corp (NASDAQ:OSH).

How are hedge funds trading Orchard Supply Hardware Stores Corp (NASDAQ:OSH)?

At Q1’s end, a total of 5 of the hedge funds we track held long positions in this stock, a change of -17% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially.

Of the funds we track, Edward Lampert’s ESL Investments had the biggest position in Orchard Supply Hardware Stores Corp (NASDAQ:OSH), worth close to $4.1 million, accounting for 0.1% of its total 13F portfolio. On ESL Investments’s heels is Bruce Berkowitz of Fairholme (FAIRX), with a $2.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Jim Simons’s Renaissance Technologies, Francis Chou’s Chou Associates Management and Mario Gabelli’s GAMCO Investors.

Since Orchard Supply Hardware Stores Corp (NASDAQ:OSH) has experienced bearish sentiment from hedge fund managers, we can see that there were a few money managers who were dropping their positions entirely at the end of the first quarter. Intriguingly, Murray Stahl’s Horizon Asset Management cut the largest investment of the “upper crust” of funds we monitor, comprising close to $0.6 million in stock. These moves are important to note, as total hedge fund interest fell by 1 funds at the end of the first quarter.

How are insiders trading Orchard Supply Hardware Stores Corp (NASDAQ:OSH)?

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time frame, Orchard Supply Hardware Stores Corp (NASDAQ:OSH) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Orchard Supply Hardware Stores Corp (NASDAQ:OSH). These stocks are The Home Depot, Inc. (NYSE:HD), Lowe’s Companies, Inc. (NYSE:LOW), Lumber Liquidators Holdings Inc (NYSE:LL), , and Builders FirstSource, Inc. (NASDAQ:BLDR). This group of stocks are the members of the home improvement stores industry and their market caps are similar to OSH’s market cap.