If you’d ask most market participants, hedge funds are seen as worthless, outdated financial tools of the past. While there are more than 8000 funds in operation at the moment, we hone in on the moguls of this group, about 450 funds. It is widely believed that this group controls the lion’s share of all hedge funds’ total capital, and by paying attention to their best equity investments, we have come up with a number of investment strategies that have historically outperformed the S&P 500 index. 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 topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Just as integral, optimistic insider trading activity is another way to parse down the stock market universe. There are plenty of incentives for an insider to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this tactic if piggybackers know where to look (learn more here).
Consequently, let’s take a gander at the key action encompassing Varian Medical Systems, Inc. (NYSE:VAR).
Hedge fund activity in Varian Medical Systems, Inc. (NYSE:VAR)
At the end of the fourth quarter, a total of 16 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, Generation Investment Management, managed by David Blood and Al Gore, holds the largest position in Varian Medical Systems, Inc. (NYSE:VAR). Generation Investment Management has a $258 million position in the stock, comprising 6.1% of its 13F portfolio. On Generation Investment Management’s heels is Sectoral Asset Management, managed by Jérôme Pfund and Michael Sjöström, which held a $79 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Because Varian Medical Systems, Inc. (NYSE:VAR) has experienced a declination in interest from the smart money, it’s easy to see that there was a specific group of money managers that elected to cut their positions entirely in Q4. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest stake of all the hedgies we track, totaling an estimated $16 million in call options, and John Murphy of Alydar Capital was right behind this move, as the fund said goodbye to about $12 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Varian Medical Systems, Inc. (NYSE:VAR)?
Insider purchases made by high-level executives is particularly usable when the company in focus has seen transactions within the past six months. Over the last six-month time period, Varian Medical Systems, Inc. (NYSE:VAR) has seen zero unique insiders purchasing, and 13 insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey’s studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Varian Medical Systems, Inc. (NYSE:VAR) applies perfectly to this mantra.
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