This Metric Says You Are Smart to Sell Sothebys (BID)

Is Sothebys (NYSE:BID) a good investment?

In the 21st century investor’s toolkit, there are a multitude of gauges shareholders can use to track the equity markets. Some of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite investment managers can trounce their index-focused peers by a healthy amount (see just how much).

Just as key, positive insider trading activity is a second way to analyze the world of equities. There are many incentives for a bullish insider to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this strategy if investors understand what to do (learn more here).

Now that that’s out of the way, we’re going to discuss the latest info about Sothebys (NYSE:BID).

Hedge fund activity in Sothebys (NYSE:BID)

In preparation for the third quarter, a total of 18 of the hedge funds we track were long in this stock, a change of -28% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially.

According to our 13F database, Royce & Associates, managed by Chuck Royce, holds the biggest position in Sothebys (NYSE:BID). Royce & Associates has a $139.2 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Ariel Investments, managed by John W. Rogers, which held a $118.6 million position; 1.9% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Dan Loeb’s Third Point, Ken Fisher’s Fisher Asset Management and Nelson Peltz’s Trian Partners.

As Sothebys (NYSE:BID) has witnessed a fall in interest from the entirety of the hedge funds we track, we can see that there were a few funds who were dropping their full holdings in Q1. At the top of the heap, Mariko Gordon’s Daruma Asset Management sold off the biggest stake of the “upper crust” of funds we key on, comprising an estimated $51.7 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also dropped its stock, about $20.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 7 funds in Q1.

What have insiders been doing with Sothebys (NYSE:BID)?

Insider buying is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time frame, Sothebys (NYSE:BID) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Sothebys (NYSE:BID). These stocks are Francesca’s Holdings Corp (NASDAQ:FRAN), Vitamin Shoppe Inc (NYSE:VSI), Coinstar, Inc. (NASDAQ:CSTR), Five Below Inc (NASDAQ:FIVE), and HSN, Inc. (NASDAQ:HSNI). All of these stocks are in the specialty retail, other industry and their market caps match BID’s market cap.

Using the results shown by Insider Monkey’s tactics, regular investors should always pay attention to hedge fund and insider trading activity, and Sothebys (NYSE:BID) shareholders fit into this picture quite nicely.

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