Rollins, Inc. (ROL): Insiders Aren’t Crazy About It

Rollins, Inc. (NYSE:ROL) has seen a decrease in support from the world’s most elite money managers lately.

In the eyes of most market participants, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are greater than 8000 funds trading at present, we at Insider Monkey hone in on the leaders of this group, around 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total asset base, and by monitoring their best stock picks, we have uncovered a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as integral, optimistic insider trading activity is another way to parse down the marketplace. As the old adage goes: there are a variety of incentives for an insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this tactic if you know what to do (learn more here).

Consequently, let’s take a glance at the latest action encompassing Rollins, Inc. (NYSE:ROL).

How have hedgies been trading Rollins, Inc. (NYSE:ROL)?

At the end of the first quarter, a total of 10 of the hedge funds we track were bullish in this stock, a change of -23% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.

When looking at the hedgies we track, GAMCO Investors, managed by Mario Gabelli, holds the most valuable position in Rollins, Inc. (NYSE:ROL). GAMCO Investors has a $85.1 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $20.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.

Since Rollins, Inc. (NYSE:ROL) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who were dropping their entire stakes at the end of the first quarter. At the top of the heap, Glenn Russell Dubin’s Highbridge Capital Management dropped the largest stake of the 450+ funds we watch, valued at an estimated $1.1 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also sold off its stock, about $0.6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds at the end of the first quarter.

What do corporate executives and insiders think about Rollins, Inc. (NYSE:ROL)?

Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time frame, Rollins, Inc. (NYSE:ROL) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Rollins, Inc. (NYSE:ROL). These stocks are Vantiv Inc (NYSE:VNTV), MAXIMUS, Inc. (NYSE:MMS), WEX Inc (NYSE:WXS), Global Payments Inc (NYSE:GPN), and athenahealth, Inc (NASDAQ:ATHN). This group of stocks belong to the business services industry and their market caps are similar to ROL’s market cap.

With the results shown by our research, everyday investors should always watch hedge fund and insider trading activity, and Rollins, Inc. (NYSE:ROL) applies perfectly to this mantra.

Click here to learn why you should track hedge funds