Silver Bay Realty Trust Corp (SBY): Are Hedge Funds Right About This Stock?

Silver Bay Realty Trust Corp (NYSE:SBY) investors should be aware of an increase in activity from the world’s largest hedge funds recently.

In today’s marketplace, there are dozens of methods shareholders can use to track stocks. A duo of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top investment managers can trounce the S&P 500 by a solid amount (see just how much).

Equally as beneficial, optimistic insider trading activity is a second way to parse down the stock market universe. Obviously, there are lots of motivations for an executive to drop shares of his or her company, but only one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this strategy if “monkeys” know what to do (learn more here).

Keeping this in mind, let’s take a gander at the latest action regarding Silver Bay Realty Trust Corp (NYSE:SBY).

How are hedge funds trading Silver Bay Realty Trust Corp (NYSE:SBY)?

Heading into Q2, a total of 17 of the hedge funds we track were bullish in this stock, a change of 55% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Venor Capital Management, managed by Jeffrey Bersh and Michael Wartell, holds the largest position in Silver Bay Realty Trust Corp (NYSE:SBY). Venor Capital Management has a $22.7 million position in the stock, comprising 9.3% of its 13F portfolio. Sitting at the No. 2 spot is SAB Capital Management, managed by Brian Jackelow, which held a $21.4 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Paul Ruddock and Steve Heinz’s Lansdowne Partners, Steven Cohen’s SAC Capital Advisors and Bain Capital’s Brookside Capital.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Brookside Capital, managed by Bain Capital, created the largest position in Silver Bay Realty Trust Corp (NYSE:SBY). Brookside Capital had 7.1 million invested in the company at the end of the quarter. David Tepper’s Appaloosa Management LP also initiated a $2.5 million position during the quarter. The following funds were also among the new SBY investors: Don Morgan’s Brigade Capital, Jim Simons’s Renaissance Technologies, and Cliff Asness’s AQR Capital Management.

What have insiders been doing with Silver Bay Realty Trust Corp (NYSE:SBY)?

Insider buying is most useful when the company in question has seen transactions within the past six months. Over the last half-year time period, Silver Bay Realty Trust Corp (NYSE:SBY) has seen 8 unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Silver Bay Realty Trust Corp (NYSE:SBY). These stocks are Education Realty Trust, Inc. (NYSE:EDR), Dynex Capital Inc (NYSE:DX), Apollo Residential Mortgage Inc (NYSE:AMTG), Associated Estates Realty Corporation (NYSE:AEC), and Resource Capital Corp. (NYSE:RSO). This group of stocks are in the reit – residential industry and their market caps resemble SBY’s market cap.