The Walt Disney Company (DIS): The Data That’s Screaming ‘Sell, Sell, Sell’

Is The Walt Disney Company (NYSE:DIS) the right pick for your portfolio? Investors who are in the know are taking a pessimistic view. The number of long hedge fund positions decreased by 5 recently.

If you’d ask most shareholders, hedge funds are viewed as unimportant, old financial tools of the past. While there are over 8000 funds in operation at the moment, we hone in on the upper echelon of this club, close to 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by keeping an eye on their highest performing picks, we have spotted a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Equally as beneficial, positive insider trading activity is a second way to break down the world of equities. Obviously, there are a number of stimuli for an insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if shareholders know what to do (learn more here).

With all of this in mind, let’s take a glance at the recent action regarding The Walt Disney Company (NYSE:DIS).

How have hedgies been trading The Walt Disney Company (NYSE:DIS)?

At the end of the fourth quarter, a total of 47 of the hedge funds we track were bullish in this stock, a change of -10% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.

According to our comprehensive database, Southeastern Asset Management, managed by Mason Hawkins, holds the largest position in The Walt Disney Company (NYSE:DIS). Southeastern Asset Management has a $907 million position in the stock, comprising 4% of its 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $416.2 million position; 1.2% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Chris Hohn’s Childrens Investment Fund, John Armitage’s Egerton Capital Limited and Stephen Mandel’s Lone Pine Capital.

Seeing as The Walt Disney Company (NYSE:DIS) has experienced falling interest from the smart money, we can see that there exists a select few hedgies that elected to cut their full holdings last quarter. Interestingly, Lee Ainslie’s Maverick Capital cut the biggest position of all the hedgies we monitor, totaling an estimated $101.2 million in stock.. Michael Karsch’s fund, Karsch Capital Management, also sold off its stock, about $49.1 million worth. These transactions are interesting, as total hedge fund interest fell by 5 funds last quarter.

How are insiders trading The Walt Disney Company (NYSE:DIS)?

Bullish insider trading is most useful when the company in question has experienced transactions within the past 180 days. Over the latest half-year time period, The Walt Disney Company (NYSE:DIS) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to The Walt Disney Company (NYSE:DIS). These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Starz (NASDAQ:STRZA), The Madison Square Garden Co (NASDAQ:MSG), Time Warner Inc (NYSE:TWX), and News Corp (NASDAQ:NWSA). All of these stocks are in the entertainment – diversified industry and their market caps are similar to DIS’s market cap.

With the returns exhibited by our studies, retail investors must always monitor hedge fund and insider trading activity, and The Walt Disney Company (NYSE:DIS) applies perfectly to this mantra.

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