Should You Avoid Pacific Sunwear of California, Inc. (PSUN)?

Pacific Sunwear of California, Inc. (NASDAQ:PSUN) has seen a decrease in activity from the world’s largest hedge funds in recent months.

At the moment, there are many indicators investors can use to monitor publicly traded companies. A duo of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the S&P 500 by a superb amount (see just how much).

Equally as beneficial, bullish insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are plenty of stimuli for an executive to cut shares of his or her company, but only one, very clear reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if shareholders know where to look (learn more here).

Now, it’s important to take a peek at the recent action regarding Pacific Sunwear of California, Inc. (NASDAQ:PSUN).

Hedge fund activity in Pacific Sunwear of California, Inc. (NASDAQ:PSUN)

In preparation for this quarter, a total of 8 of the hedge funds we track were bullish in this stock, a change of -11% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.

Of the funds we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Pacific Sunwear of California, Inc. (NASDAQ:PSUN). Adage Capital Management has a $20.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $2.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Peter A. Wright’s P.A.W. CAPITAL PARTNERS, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.

Judging by the fact that Pacific Sunwear of California, Inc. (NASDAQ:PSUN) has faced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedgies that decided to sell off their positions entirely heading into Q2. Intriguingly, Jim Simons’s Renaissance Technologies cut the largest position of the “upper crust” of funds we key on, worth an estimated $0.1 million in stock., and Wilmot B. Harkey and Daniel Mack of Nantahala Capital Management was right behind this move, as the fund said goodbye to about $0.1 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds heading into Q2.

What have insiders been doing with Pacific Sunwear of California, Inc. (NASDAQ:PSUN)?

Bullish insider trading is most useful when the company in question has experienced transactions within the past 180 days. Over the last half-year time period, Pacific Sunwear of California, Inc. (NASDAQ:PSUN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Pacific Sunwear of California, Inc. (NASDAQ:PSUN). These stocks are Destination XL Group Inc (NASDAQ:DXLG), Christopher & Banks Corporation (NYSE:CBK), Cherokee Inc. (NASDAQ:CHKE), Citi Trends, Inc. (NASDAQ:CTRN), and Body Central Corp (NASDAQ:BODY). This group of stocks belong to the apparel stores industry and their market caps are similar to PSUN’s market cap.

With the results shown by the aforementioned studies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Pacific Sunwear of California, Inc. (NASDAQ:PSUN) is no exception.

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