This Metric Says You Are Smart to Buy Lazard Ltd (LAZ)

Lazard Ltd (NYSE:LAZ) was in 19 hedge funds’ portfolio at the end of the first quarter of 2013. LAZ investors should be aware of an increase in activity from the world’s largest hedge funds recently. There were 15 hedge funds in our database with LAZ holdings at the end of the previous quarter.

In the financial world, there are dozens of methods market participants can use to track their holdings. A pair of the most useful are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top investment managers can outperform the S&P 500 by a superb margin (see just how much).

Equally as important, positive insider trading sentiment is a second way to parse down the world of equities. Just as you’d expect, there are a variety of motivations for an insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this tactic if “monkeys” know where to look (learn more here).

Keeping this in mind, let’s take a glance at the latest action surrounding Lazard Ltd (NYSE:LAZ).

How have hedgies been trading Lazard Ltd (NYSE:LAZ)?

In preparation for this quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of 27% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings considerably.

Of the funds we track, Ariel Investments, managed by John W. Rogers, holds the most valuable position in Lazard Ltd (NYSE:LAZ). Ariel Investments has a $209 million position in the stock, comprising 3.6% of its 13F portfolio. The second largest stake is held by Trian Partners, managed by Nelson Peltz, which held a $191.1 million position; 4.1% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include Chuck Royce’s Royce & Associates, Ken Fisher’s Fisher Asset Management and Andrew Sandler’s Sandler Capital Management.

Now, key money managers were breaking ground themselves. Jabre Capital Partners, managed by Philippe Jabre, assembled the biggest position in Lazard Ltd (NYSE:LAZ). Jabre Capital Partners had 8.8 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $3.5 million investment in the stock during the quarter. The other funds with brand new LAZ positions are Van Schreiber’s Bennett Lawrence Management, Ken Griffin’s Citadel Investment Group, and Jacob Gottlieb’s Visium Asset Management.

What have insiders been doing with Lazard Ltd (NYSE:LAZ)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest 180-day time frame, Lazard Ltd (NYSE:LAZ) has experienced zero unique insiders buying, 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 Lazard Ltd (NYSE:LAZ). These stocks are Waddell & Reed Financial, Inc. (NYSE:WDR), American Capital Ltd. (NASDAQ:ACAS), KKR & Co. L.P. (NYSE:KKR), Och-Ziff Capital Management Group LLC (NYSE:OZM), and Legg Mason, Inc. (NYSE:LM). All of these stocks are in the asset management industry and their market caps are similar to LAZ’s market cap.

With the returns shown by the aforementioned studies, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Lazard Ltd (NYSE:LAZ) applies perfectly to this mantra.

Click here to learn why you should track hedge funds