Is it smart to be bullish on Heartland Payment Systems, Inc. (NYSE:HPY)?
If you were to ask many investors, hedge funds are assumed to be useless, old financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, this site looks at the elite of this club, close to 525 funds. It is widely held that this group controls most of the hedge fund industry’s total capital, and by monitoring their best picks, we’ve found a number of investment strategies that have historically beaten Mr. Market. 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 started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as necessary, positive insider trading sentiment is a second way to analyze the world of equities. Obviously, there are many motivations for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this method if shareholders understand where to look (learn more here).
Keeping this in mind, it’s important to study the recent info surrounding Heartland Payment Systems, Inc. (NYSE:HPY).
How are hedge funds trading Heartland Payment Systems, Inc. (NYSE:HPY)?
Heading into Q3, a total of 11 of the hedge funds we track were bullish in this stock, a change of -42% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly.
Out of the hedge funds we follow, Brian Taylor’s Pine River Capital Management had the most valuable position in Heartland Payment Systems, Inc. (NYSE:HPY), worth close to $33.7 million, comprising 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $19.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Jim Simons’s Renaissance Technologies, Anil Stevens and Glenn Shapiro’s Parameter Capital Management and Ken Grossman and Glen Schneider’s SG Capital Management.
Because Heartland Payment Systems, Inc. (NYSE:HPY) has faced a fall in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedgies that elected to cut their full holdings last quarter. Interestingly, Malcolm Fairbairn’s Ascend Capital sold off the largest investment of all the hedgies we key on, worth close to $8.4 million in call options.. SAC Subsidiary’s fund, Sigma Capital Management, also sold off its call options., about $3.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds last quarter.
Insider trading activity in Heartland Payment Systems, Inc. (NYSE:HPY)
Bullish insider trading is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last half-year time frame, Heartland Payment Systems, Inc. (NYSE:HPY) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Heartland Payment Systems, Inc. (NYSE:HPY). These stocks are VistaPrint Limited (NASDAQ:VPRT), Atlas Resource Partners, L.P. (NYSE:ARP), Interval Leisure Group, Inc. (NASDAQ:IILG), Cardtronics, Inc. (NASDAQ:CATM), and ABM Industries, Inc. (NYSE:ABM). This group of stocks belong to the business services industry and their market caps are similar to HPY’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| VistaPrint Limited (NASDAQ:VPRT) | 10 | 0 | 0 |
| Atlas Resource Partners, L.P. (NYSE:ARP) | 12 | 0 | 0 |
| Interval Leisure Group, Inc. (NASDAQ:IILG) | 15 | 0 | 0 |
| Cardtronics, Inc. (NASDAQ:CATM) | 12 | 0 | 0 |
| ABM Industries, Inc. (NYSE:ABM) | 10 | 0 | 0 |
Using the returns demonstrated by the previously mentioned analyses, regular investors must always pay attention to hedge fund and insider trading sentiment, and Heartland Payment Systems, Inc. (NYSE:HPY) is an important part of this process.
