According to most shareholders, hedge funds are seen as unimportant, old investment tools of the past. While there are over 8000 funds with their doors open today, we at Insider Monkey hone in on the aristocrats of this club, close to 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total capital, and by monitoring their best investments, we have formulated a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 trumped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as integral, bullish insider trading activity is another way to break down the world of equities. Obviously, there are plenty of incentives for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the valuable potential of this method if you understand where to look (learn more here).
With all of this in mind, let’s take a look at the latest action surrounding Citi Trends, Inc. (NASDAQ:CTRN).
What does the smart money think about Citi Trends, Inc. (NASDAQ:CTRN)?
At year’s end, a total of 7 of the hedge funds we track were bullish in this stock, a change of 40% from the third quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes considerably.
Of the funds we track, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the most valuable position in Citi Trends, Inc. (NASDAQ:CTRN). Nantahala Capital Management has a $19.2 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $7.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Mike Vranos’s Ellington.
With a general bullishness amongst the heavyweights, some big names have jumped into Citi Trends, Inc. (NASDAQ:CTRN) headfirst. Millennium Management, managed by Israel Englander, established the largest position in Citi Trends, Inc. (NASDAQ:CTRN). Millennium Management had 0.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.1 million position during the quarter. The only other fund with a brand new CTRN position is Ken Griffin’s Citadel Investment Group.
How are insiders trading Citi Trends, Inc. (NASDAQ:CTRN)?
Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past half-year. Over the latest half-year time frame, Citi Trends, Inc. (NASDAQ:CTRN) has experienced 1 unique insiders purchasing, and zero 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 Citi Trends, Inc. (NASDAQ:CTRN). These stocks are Christopher & Banks Corporation (NYSE:CBK), Cherokee Inc. (NASDAQ:CHKE), Pacific Sunwear of California, Inc. (NASDAQ:PSUN), and Body Central Corp (NASDAQ:BODY). All of these stocks are in the apparel stores industry and their market caps match CTRN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Christopher & Banks Corporation (NYSE:CBK) | 13 | 6 | 2 |
| Cherokee Inc. (NASDAQ:CHKE) | 3 | 0 | 1 |
| Pacific Sunwear of California, Inc. (NASDAQ:PSUN) | 9 | 0 | 0 |
| Body Central Corp (NASDAQ:BODY) | 9 | 1 | 0 |
With the returns exhibited by Insider Monkey’s tactics, retail investors must always watch hedge fund and insider trading sentiment, and Citi Trends, Inc. (NASDAQ:CTRN) is an important part of this process.
