If you were to ask many traders, hedge funds are assumed to be delayed, old financial vehicles of a period lost to current times. Although there are over 8,000 hedge funds in operation today, Insider Monkey focuses on the crème de la crème of this group, close to 525 funds. It is assumed that this group has its hands on the lion’s share of the smart money’s total assets, and by keeping an eye on their highest performing picks, we’ve determined a few investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outperformed 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 33 percentage points in 11 months (find a sample of our picks).
Just as key, optimistic insider trading activity is a second way to look at the stock market universe. There are plenty of stimuli for a bullish insider to drop shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this tactic if piggybackers know where to look (learn more here).
Furthermore, it’s important to study the recent info surrounding Companhia de Saneamento Basico (ADR) (NYSE:SBS).
How have hedgies been trading Companhia de Saneamento Basico (ADR) (NYSE:SBS)?
At the end of the second quarter, a total of 14 of the hedge funds we track were long in this stock, a change of 75% from the first quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially.
Out of the hedge funds we follow, Cliff Asness’s AQR Capital Management had the most valuable position in Companhia de Saneamento Basico (ADR) (NYSE:SBS), worth close to $21.6 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Highbridge Capital Management, managed by Glenn Russell Dubin, which held a $20.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Jim Simons’s Renaissance Technologies, John I. Dickerson’s Summit Global Management and Ken Griffin’s Citadel Investment Group.
Consequently, particular hedge funds have jumped into Companhia de Saneamento Basico (ADR) (NYSE:SBS) headfirst. AQR Capital Management, managed by Cliff Asness, established the most outsized position in Companhia de Saneamento Basico (ADR) (NYSE:SBS). AQR Capital Management had 21.6 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $20.1 million position during the quarter. The other funds with brand new SBS positions are Jim Simons’s Renaissance Technologies, John I. Dickerson’s Summit Global Management, and Ken Griffin’s Citadel Investment Group.
How are insiders trading Companhia de Saneamento Basico (ADR) (NYSE:SBS)?
Insider buying made by high-level executives is particularly usable when the company in focus has seen transactions within the past six months. Over the latest half-year time period, Companhia de Saneamento Basico (ADR) (NYSE:SBS) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to Companhia de Saneamento Basico (ADR) (NYSE:SBS). These stocks are Enersis S.A. (ADR) (NYSE:ENI) and CPFL Energia S.A. (ADR) (NYSE:CPL). All of these stocks are in the foreign utilities industry and their market caps are closest to SBS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Enersis S.A. (ADR) (NYSE:ENI) | 9 | 0 | 0 |
| CPFL Energia S.A. (ADR) (NYSE:CPL) | 5 | 0 | 0 |
Using the results explained by the previously mentioned tactics, average investors should always pay attention to hedge fund and insider trading activity, and Companhia de Saneamento Basico (ADR) (NYSE:SBS) is an important part of this process.
