Is it smart to be bullish on The Wet Seal, Inc. (NASDAQ:WTSL)?
If you were to ask many of your peers, hedge funds are perceived as useless, old financial tools of a forgotten age. Although there are over 8,000 hedge funds trading currently, Insider Monkey focuses on the masters of this group, around 525 funds. It is widely held that this group controls most of all hedge funds’ total assets, and by watching their highest quality picks, we’ve come up with a number of investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 topped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as necessary, optimistic insider trading activity is a second way to look at the financial markets. Obviously, there are plenty of motivations for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this strategy if “monkeys” understand what to do (learn more here).
Thus, we’re going to analyze the newest info for The Wet Seal, Inc. (NASDAQ:WTSL).
Hedge fund activity in The Wet Seal, Inc. (NASDAQ:WTSL)
Heading into Q3, a total of 16 of the hedge funds we track held long positions in this stock, a change of 33% from the first quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully.
With a general bullishness amongst the titans, specific money managers have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, assembled the most outsized position in The Wet Seal, Inc. (NASDAQ:WTSL). AQR Capital Management had 11.9 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $9.8 million investment in the stock during the quarter. The following funds were also among the new WTSL investors: Jason F. Harris’s Kendall Square Capital, Glenn Russell Dubin’s Highbridge Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
What do corporate executives and insiders think about The Wet Seal, Inc. (NASDAQ:WTSL)?
Insider buying made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the last 180-day time frame, The Wet Seal, Inc. (NASDAQ:WTSL) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to The Wet Seal, Inc. (NASDAQ:WTSL). These stocks are bebe stores, inc. (NASDAQ:BEBE), Destination Maternity Corp (NASDAQ:DEST), Christopher & Banks Corporation (NYSE:CBK), Destination XL Group Inc (NASDAQ:DXLG), and New York & Company, Inc. (NYSE:NWY). All of these stocks are in the apparel stores industry and their market caps resemble WTSL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| bebe stores, inc. (NASDAQ:BEBE) | 7 | 0 | 0 |
| Destination Maternity Corp (NASDAQ:DEST) | 10 | 0 | 0 |
| Christopher & Banks Corporation (NYSE:CBK) | 14 | 0 | 0 |
| Destination XL Group Inc (NASDAQ:DXLG) | 8 | 0 | 0 |
| New York & Company, Inc. (NYSE:NWY) | 11 | 0 | 0 |
Using the returns explained by our studies, regular investors should always keep one eye on hedge fund and insider trading activity, and The Wet Seal, Inc. (NASDAQ:WTSL) applies perfectly to this mantra.
