Piper Jaffray Companies (PJC): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Piper Jaffray Companies (NYSE:PJC) was in 12 hedge funds’ portfolio at the end of March. PJC shareholders have witnessed an increase in hedge fund interest lately. There were 11 hedge funds in our database with PJC holdings at the end of the previous quarter.

In the eyes of most market participants, hedge funds are seen as slow, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open today, we hone in on the upper echelon of this club, around 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their top equity investments, we have formulated a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 beneficial, bullish insider trading sentiment is another way to parse down the marketplace. Just as you’d expect, there are plenty of stimuli for an insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this tactic if shareholders understand where to look (learn more here).

With all of this in mind, let’s take a look at the latest action surrounding Piper Jaffray Companies (NYSE:PJC).

What have hedge funds been doing with Piper Jaffray Companies (NYSE:PJC)?

Heading into Q2, a total of 12 of the hedge funds we track held long positions in this stock, a change of 9% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Piper Jaffray Companies (NYSE:PJC). Royce & Associates has a $14.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $7.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, established the largest position in Piper Jaffray Companies (NYSE:PJC). Renaissance Technologies had 4.4 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Paul Tudor Jones’s Tudor Investment Corp, and Matthew Tewksbury’s Stevens Capital Management.

What have insiders been doing with Piper Jaffray Companies (NYSE:PJC)?

Insider purchases made by high-level executives is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Piper Jaffray Companies (NYSE:PJC) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Piper Jaffray Companies (NYSE:PJC). These stocks are GFI Group Inc. (NYSE:GFIG), Medley Capital Corp (NYSE:MCC), FXCM Inc (NYSE:FXCM), Interactive Brokers Group, Inc. (NASDAQ:IBKR), and BGC Partners, Inc. (NASDAQ:BGCP). This group of stocks are in the investment brokerage – national industry and their market caps are closest to PJC’s market cap.

With the results demonstrated by Insider Monkey’s studies, retail investors must always watch hedge fund and insider trading sentiment, and Piper Jaffray Companies (NYSE:PJC) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds