Should You Avoid Global Payments Inc (GPN)?

Global Payments Inc (NYSE:GPN) was in 23 hedge funds’ portfolio at the end of the first quarter of 2013. GPN shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 29 hedge funds in our database with GPN positions at the end of the previous quarter.

To most stock holders, hedge funds are perceived as worthless, outdated financial vehicles of the past. While there are over 8000 funds in operation at the moment, we hone in on the elite of this group, close to 450 funds. Most estimates calculate that this group has its hands on the majority of all hedge funds’ total capital, and by monitoring their best stock picks, we have deciphered 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 annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, optimistic insider trading sentiment is another way to parse down the marketplace. Just as you’d expect, there are many stimuli for an insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this method if “monkeys” understand what to do (learn more here).

With all of this in mind, it’s important to take a look at the recent action encompassing Global Payments Inc (NYSE:GPN).

How are hedge funds trading Global Payments Inc (NYSE:GPN)?

At the end of the first quarter, a total of 23 of the hedge funds we track were bullish in this stock, a change of -21% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Fir Tree, managed by Jeffrey Tannenbaum, holds the largest position in Global Payments Inc (NYSE:GPN). Fir Tree has a $83.1 million position in the stock, comprising 1.5% of its 13F portfolio. The second largest stake is held by Brian Taylor of Pine River Capital Management, with a $36.6 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Amy Minella’s Cardinal Capital, D. E. Shaw’s D E Shaw and Curtis Macnguyen’s Ivory Capital (Investment Mgmt).

Due to the fact that Global Payments Inc (NYSE:GPN) has witnessed a declination in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers who sold off their full holdings heading into Q2. At the top of the heap, Jim Simons’s Renaissance Technologies dropped the largest investment of the 450+ funds we key on, comprising close to $20.5 million in stock., and SAC Subsidiary of Sigma Capital Management was right behind this move, as the fund said goodbye to about $12.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds heading into Q2.

How have insiders been trading Global Payments Inc (NYSE:GPN)?

Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time period, Global Payments Inc (NYSE:GPN) has experienced zero unique insiders buying, and 4 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 Global Payments Inc (NYSE:GPN). These stocks are Cintas Corporation (NASDAQ:CTAS), Vantiv Inc (NYSE:VNTV), WEX Inc (NYSE:WXS), athenahealth, Inc (NASDAQ:ATHN), and Rollins, Inc. (NYSE:ROL). This group of stocks are the members of the business services industry and their market caps are closest to GPN’s market cap.

With the returns shown by our tactics, everyday investors should always keep an eye on hedge fund and insider trading activity, and Global Payments Inc (NYSE:GPN) is no exception.

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