Overstock.com, Inc. (NASDAQ:OSTK) has experienced an increase in hedge fund sentiment lately.
According to most traders, hedge funds are perceived as worthless, outdated financial vehicles of yesteryear. While there are over 8000 funds trading at present, we hone in on the bigwigs of this group, around 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their best equity investments, we have revealed a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as integral, optimistic insider trading activity is another way to break down the world of equities. Just as you’d expect, there are lots of motivations for an executive to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this method if shareholders know what to do (learn more here).
Keeping this in mind, it’s important to take a glance at the key action encompassing Overstock.com, Inc. (NASDAQ:OSTK).
How are hedge funds trading Overstock.com, Inc. (NASDAQ:OSTK)?
In preparation for this year, a total of 9 of the hedge funds we track were long in this stock, a change of 29% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings substantially.
Of the funds we track, Prem Watsa’s Fairfax Financial Holdings had the largest position in Overstock.com, Inc. (NASDAQ:OSTK), worth close to $48.5 million, comprising 1.9% of its total 13F portfolio. Sitting at the No. 2 spot is Francis Chou of Chou Associates Management, with a $33.1 million position; the fund has 8.6% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Jim Simons’s Renaissance Technologies, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
With a general bullishness amongst the heavyweights, key money managers have jumped into Overstock.com, Inc. (NASDAQ:OSTK) headfirst. Millennium Management, managed by Israel Englander, assembled the largest call position in Overstock.com, Inc. (NASDAQ:OSTK). Millennium Management had 2.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1 million investment in the stock during the quarter. The following funds were also among the new OSTK investors: Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.
What do corporate executives and insiders think about Overstock.com, Inc. (NASDAQ:OSTK)?
Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past half-year. Over the last half-year time frame, Overstock.com, Inc. (NASDAQ:OSTK) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Overstock.com, Inc. (NASDAQ:OSTK). These stocks are ValueVision Media, Inc. (NASDAQ:VVTV), PC Connection, Inc. (NASDAQ:PCCC), Stamps.com Inc. (NASDAQ:STMP), Vitacost.com, Inc. (NASDAQ:VITC), and E Commerce China Dangdang Inc (ADR) (NYSE:DANG). This group of stocks belong to the catalog & mail order houses industry and their market caps resemble OSTK’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| ValueVision Media, Inc. (NASDAQ:VVTV) | 7 | 5 | 0 |
| PC Connection, Inc. (NASDAQ:PCCC) | 5 | 0 | 4 |
| Stamps.com Inc. (NASDAQ:STMP) | 10 | 0 | 5 |
| Vitacost.com, Inc. (NASDAQ:VITC) | 1 | 0 | 0 |
| E Commerce China Dangdang Inc (ADR) (NYSE:DANG) | 3 | 0 | 0 |
With the returns demonstrated by the aforementioned time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Overstock.com, Inc. (NASDAQ:OSTK) applies perfectly to this mantra.
