Fortune Brands Home & Security Inc (NYSE:FBHS) has experienced a decrease in activity from the world’s largest hedge funds lately.
To most market participants, hedge funds are viewed as unimportant, old investment tools of yesteryear. While there are over 8000 funds trading at the moment, we at Insider Monkey hone in on the moguls of this group, close to 450 funds. Most estimates calculate that this group controls the lion’s share of all hedge funds’ total asset base, and by watching their best picks, we have brought to light a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outpaced 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as key, positive insider trading sentiment is another way to break down the financial markets. Obviously, there are a variety of stimuli for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the valuable potential of this strategy if shareholders understand where to look (learn more here).
With these “truths” under our belt, let’s take a glance at the key action encompassing Fortune Brands Home & Security Inc (NYSE:FBHS).
What does the smart money think about Fortune Brands Home & Security Inc (NYSE:FBHS)?
At Q1’s end, a total of 23 of the hedge funds we track were bullish in this stock, a change of -26% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings considerably.
When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the largest position in Fortune Brands Home & Security Inc (NYSE:FBHS), worth close to $93.3 million, comprising 0.6% of its total 13F portfolio. On GAMCO Investors’s heels is Patrick McCormack of Tiger Consumer Management, with a $79.6 million position; 3.2% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include James Dinan’s York Capital Management, Jeffrey Vinik’s Vinik Asset Management and Patrick Degorce’s Theleme Partners.
Judging by the fact that Fortune Brands Home & Security Inc (NYSE:FBHS) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there were a few hedge funds that slashed their positions entirely last quarter. At the top of the heap, Kenneth Mario Garschina’s Mason Capital Management cut the largest position of the 450+ funds we monitor, comprising an estimated $79 million in stock.. Michael Karsch’s fund, Karsch Capital Management, also sold off its stock, about $35.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds last quarter.
What do corporate executives and insiders think about Fortune Brands Home & Security Inc (NYSE:FBHS)?
Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, Fortune Brands Home & Security Inc (NYSE:FBHS) has seen 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Fortune Brands Home & Security Inc (NYSE:FBHS). These stocks are La-Z-Boy Incorporated (NYSE:LZB), Select Comfort Corp. (NASDAQ:SCSS), Mattress Firm Holding Corp (NASDAQ:MFRM), Tempur-Pedic International Inc. (NYSE:TPX), and Leggett & Platt, Inc. (NYSE:LEG). All of these stocks are in the home furnishings & fixtures industry and their market caps match FBHS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| La-Z-Boy Incorporated (NYSE:LZB) | 16 | 0 | 5 |
| Select Comfort Corp. (NASDAQ:SCSS) | 18 | 0 | 4 |
| Mattress Firm Holding Corp (NASDAQ:MFRM) | 7 | 0 | 5 |
| Tempur-Pedic International Inc. (NYSE:TPX) | 22 | 1 | 4 |
| Leggett & Platt, Inc. (NYSE:LEG) | 12 | 0 | 12 |
With the returns exhibited by Insider Monkey’s time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading activity, and Fortune Brands Home & Security Inc (NYSE:FBHS) applies perfectly to this mantra.
