This Metric Says You Are Smart to Buy Annies Inc (BNNY)

Is Annies Inc (NYSE:BNNY) a splendid stock to buy now? Hedge funds are taking a bullish view. The number of long hedge fund positions increased by 4 lately.

If you’d ask most investors, hedge funds are viewed as underperforming, outdated financial tools of years past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey hone in on the masters of this club, close to 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total capital, and by paying attention to their best picks, we have unsheathed a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, positive insider trading sentiment is another way to parse down the world of equities. There are plenty of motivations for an insider to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this method if you know what to do (learn more here).

Now, let’s take a peek at the recent action regarding Annies Inc (NYSE:BNNY).

What does the smart money think about Annies Inc (NYSE:BNNY)?

At Q1’s end, a total of 14 of the hedge funds we track were long in this stock, a change of 40% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably.

According to our comprehensive database, Jericho Capital Asset Management, managed by Josh Resnick, holds the largest position in Annies Inc (NYSE:BNNY). Jericho Capital Asset Management has a $9.8 million position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by Scopus Asset Management, managed by Alexander Mitchell, which held a $8.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Nick Niell’s Arrowgrass Capital Partners, SAC Subsidiary’s CR Intrinsic Investors and Cliff Asness’s AQR Capital Management.

Consequently, some big names were breaking ground themselves. Jericho Capital Asset Management, managed by Josh Resnick, created the most outsized position in Annies Inc (NYSE:BNNY). Jericho Capital Asset Management had 9.8 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $8.2 million position during the quarter. The other funds with brand new BNNY positions are Nick Niell’s Arrowgrass Capital Partners, SAC Subsidiary’s CR Intrinsic Investors, and Cliff Asness’s AQR Capital Management.

How have insiders been trading Annies Inc (NYSE:BNNY)?

Insider buying is at its handiest when the company in question has seen transactions within the past half-year. Over the last six-month time period, Annies Inc (NYSE:BNNY) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Annies Inc (NYSE:BNNY). These stocks are Sanderson Farms, Inc. (NASDAQ:SAFM), Cal-Maine Foods Inc (NASDAQ:CALM), Central Garden & Pet Co (NASDAQ:CENT), Dole Food Company, Inc. (NYSE:DOLE), and ZHONGPIN INC. (NASDAQ:HOGS). All of these stocks are in the food – major diversified industry and their market caps resemble BNNY’s market cap.

With the returns shown by the aforementioned tactics, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Annies Inc (NYSE:BNNY) is no exception.

Click here to learn why you should track hedge funds