This Metric Says You Are Smart to Sell SouFun Holdings Limited (ADR) (SFUN)

Is SouFun Holdings Limited (ADR) (NYSE:SFUN) worth your attention right now? Prominent investors are taking a bearish view. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience

In the 21st century investor’s toolkit, there are dozens of gauges investors can use to analyze Mr. Market. A couple of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best money managers can outperform the broader indices by a solid margin (see just how much).

Equally as key, bullish insider trading activity is a second way to break down the marketplace. Just as you’d expect, there are a variety of motivations for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this method if investors know what to do (learn more here).

Consequently, let’s take a glance at the recent action surrounding SouFun Holdings Limited (ADR) (NYSE:SFUN).

What have hedge funds been doing with SouFun Holdings Limited (ADR) (NYSE:SFUN)?

Heading into 2013, a total of 6 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Tiger Management, managed by Julian Robertson, holds the most valuable position in SouFun Holdings Limited (ADR) (NYSE:SFUN). Tiger Management has a $15.2 million position in the stock, comprising 2.7% of its 13F portfolio. Sitting at the No. 2 spot is Thomas E. Claugus of GMT Capital, with a $9.1 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Robert Karr’s Joho Capital, Donald Chiboucis’s Columbus Circle Investors and Eric Semler’s TCS Capital Management.

Seeing as SouFun Holdings Limited (ADR) (NYSE:SFUN) has witnessed bearish sentiment from hedge fund managers, logic holds that there is a sect of funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dumped the biggest position of the “upper crust” of funds we key on, totaling close to $0.9 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund said goodbye to about $0.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading SouFun Holdings Limited (ADR) (NYSE:SFUN)?

Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, SouFun Holdings Limited (ADR) (NYSE:SFUN) has seen zero unique insiders buying, 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 SouFun Holdings Limited (ADR) (NYSE:SFUN). These stocks are Blucora Inc (NASDAQ:BCOR), Renren Inc (NYSE:RENN), HealthStream, Inc. (NASDAQ:HSTM), Bitauto Hldg Ltd (ADR) (NYSE:BITA), and Move Inc. (NASDAQ:MOVE). This group of stocks are in the internet information providers industry and their market caps resemble SFUN’s market cap.

With the returns demonstrated by our strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and SouFun Holdings Limited (ADR) (NYSE:SFUN) applies perfectly to this mantra.

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