Should You Avoid Colonial Properties Trust Inc (CLP)?

Colonial Properties Trust Inc (NYSE:CLP) has seen a decrease in hedge fund interest recently.

In the financial world, there are a multitude of gauges investors can use to monitor their holdings. Two of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite money managers can outclass their index-focused peers by a superb amount (see just how much).

Just as integral, positive insider trading sentiment is another way to parse down the investments you’re interested in. Obviously, there are plenty of stimuli for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if you understand where to look (learn more here).

Keeping this in mind, it’s important to take a glance at the key action encompassing Colonial Properties Trust Inc (NYSE:CLP).

How have hedgies been trading Colonial Properties Trust Inc (NYSE:CLP)?

Heading into 2013, a total of 6 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Colonial Properties Trust Inc (NYSE:CLP). Fisher Asset Management has a $46.4 million position in the stock, comprising 0.1% of its 13F portfolio. On Fisher Asset Management’s heels is Millennium Management, managed by Israel Englander, which held a $9.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish include Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.

Seeing as Colonial Properties Trust Inc (NYSE:CLP) has faced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that slashed their positions entirely heading into 2013. At the top of the heap, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners sold off the biggest investment of the “upper crust” of funds we monitor, comprising close to $0.4 million in stock. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Colonial Properties Trust Inc (NYSE:CLP)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has seen transactions within the past half-year. Over the last 180-day time frame, Colonial Properties Trust Inc (NYSE:CLP) has experienced zero unique insiders buying, 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 Colonial Properties Trust Inc (NYSE:CLP). These stocks are PennyMac Mortgage Investment Trust (NYSE:PMT), Post Properties Inc (NYSE:PPS), ARMOUR Residential REIT, Inc. (NYSE:ARR), Sun Communities Inc (NYSE:SUI), and CYS Investments Inc (NYSE:CYS). This group of stocks are the members of the reit – residential industry and their market caps match CLP’s market cap.

With the returns demonstrated by our time-tested strategies, retail investors must always watch hedge fund and insider trading activity, and Colonial Properties Trust Inc (NYSE:CLP) is no exception.

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