Pearson PLC (ADR) (NYSE:PSO) was in 5 hedge funds’ portfolio at the end of December. PSO investors should pay attention to an increase in hedge fund sentiment of late. There were 4 hedge funds in our database with PSO holdings at the end of the previous quarter.
If you’d ask most market participants, hedge funds are seen as unimportant, outdated investment tools of the past. While there are over 8000 funds trading today, we at Insider Monkey look at the elite of this club, about 450 funds. Most estimates calculate that this group has its hands on the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their top picks, we have determined a few investment strategies that have historically outpaced the market. 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 topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as key, bullish insider trading sentiment is another way to break down the marketplace. Obviously, there are many stimuli for an insider to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).
Now, it’s important to take a look at the recent action surrounding Pearson PLC (ADR) (NYSE:PSO).
What does the smart money think about Pearson PLC (ADR) (NYSE:PSO)?
At year’s end, a total of 5 of the hedge funds we track were long in this stock, a change of 25% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably.
When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the most valuable position in Pearson PLC (ADR) (NYSE:PSO), worth close to $3.9 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Steven Cohen’s SAC Capital Advisors.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Pearson PLC (ADR) (NYSE:PSO). Arrowstreet Capital had 3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter.
What do corporate executives and insiders think about Pearson PLC (ADR) (NYSE:PSO)?
Insider purchases made by high-level executives is most useful when the primary stock in question has experienced transactions within the past six months. Over the last 180-day time period, Pearson PLC (ADR) (NYSE:PSO) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Pearson PLC (ADR) (NYSE:PSO). These stocks are Noah Education Holdings Ltd. (ADR) (NYSE:NED), Courier Corporation (NASDAQ:CRRC), Scholastic Corp (NASDAQ:SCHL), John Wiley & Sons Inc (NYSE:JW-A), and The McGraw-Hill Companies, Inc. (NYSE:MHP). This group of stocks are in the publishing – books industry and their market caps are similar to PSO’s market cap.
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| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Noah Education Holdings Ltd. (ADR) (NYSE:NED) | 1 | 0 | 0 |
| Courier Corporation (NASDAQ:CRRC) | 6 | 0 | 0 |
| Scholastic Corp (NASDAQ:SCHL) | 10 | 0 | 1 |
| John Wiley & Sons Inc (NYSE:JW-A) | 0 | 0 | |
| The McGraw-Hill Companies, Inc. (NYSE:MHP) | 31 | 0 | 0 |
With the returns exhibited by Insider Monkey’s time-tested strategies, retail investors should always pay attention to hedge fund and insider trading activity, and Pearson PLC (ADR) (NYSE:PSO) shareholders fit into this picture quite nicely.
