This Metric Says You Are Smart to Buy Stewart Enterprises, Inc. (STEI)

Is Stewart Enterprises, Inc. (NASDAQ:STEI) a buy here? The smart money is turning bullish. The number of bullish hedge fund bets increased by 3 recently.

According to most stock holders, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey choose to focus on the top tier of this group, around 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total asset base, and by monitoring their highest performing investments, we have found a number of investment strategies that have historically outpaced 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 began to 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 (check out a sample of our picks).

Just as important, optimistic insider trading activity is another way to break down the marketplace. There are many stimuli for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this method if “monkeys” know what to do (learn more here).

With all of this in mind, let’s take a glance at the key action surrounding Stewart Enterprises, Inc. (NASDAQ:STEI).

How are hedge funds trading Stewart Enterprises, Inc. (NASDAQ:STEI)?

At Q1’s end, a total of 19 of the hedge funds we track held long positions in this stock, a change of 19% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully.

Of the funds we track, Matthew Halbower’s Pentwater Capital Management had the largest position in Stewart Enterprises, Inc. (NASDAQ:STEI), worth close to $92.2 million, comprising 3.9% of its total 13F portfolio. The second largest stake is held by Ascend Capital, managed by Malcolm Fairbairn, which held a $11.7 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Jane Mendillo’s Harvard Management Co, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management.

Now, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Stewart Enterprises, Inc. (NASDAQ:STEI). Balyasny Asset Management had 3.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $1 million position during the quarter. The other funds with brand new STEI positions are Mike Vranos’s Ellington, Steven Cohen’s SAC Capital Advisors, and Paul Tudor Jones’s Tudor Investment Corp.

What do corporate executives and insiders think about Stewart Enterprises, Inc. (NASDAQ:STEI)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past 180 days. Over the last half-year time period, Stewart Enterprises, Inc. (NASDAQ:STEI) has seen 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).

With the returns shown by Insider Monkey’s time-tested strategies, everyday investors should always monitor hedge fund and insider trading activity, and Stewart Enterprises, Inc. (NASDAQ:STEI) is an important part of this process.

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