This Metric Says You Are Smart to Sell Walgreen Company (WAG)

Walgreen Company (NYSE:WAG) was in 52 hedge funds’ portfolio at the end of the first quarter of 2013. WAG shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 53 hedge funds in our database with WAG positions at the end of the previous quarter.

To most stock holders, hedge funds are perceived as unimportant, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, we look at the crème de la crème of this club, around 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total asset base, and by watching their highest performing stock picks, we have spotted a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as beneficial, positive insider trading activity is a second way to parse down the financial markets. Obviously, there are plenty of 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. Plenty of academic studies have demonstrated the valuable potential of this tactic if “monkeys” know what to do (learn more here).

Consequently, we’re going to take a look at the key action surrounding Walgreen Company (NYSE:WAG).

What does the smart money think about Walgreen Company (NYSE:WAG)?

At the end of the first quarter, a total of 52 of the hedge funds we track were long in this stock, a change of -2% from the first quarter.

Seeing as Walgreen Company (NYSE:WAG) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of fund managers who sold off their entire stakes at the end of the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest investment of all the hedgies we monitor, comprising an estimated $84.3 million in stock.. Alexander Mitchell’s fund, Scopus Asset Management, also sold off its stock, about $43.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds at the end of the first quarter.

How are insiders trading Walgreen Company (NYSE:WAG)?

Bullish insider trading is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time period, Walgreen Company (NYSE:WAG) has seen 1 unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Walgreen Company (NYSE:WAG). These stocks are PharMerica Corporation (NYSE:PMC), BioScrip Inc. (NASDAQ:BIOS), Rite Aid Corporation (NYSE:RAD), GNC Holdings Inc (NYSE:GNC), and CVS Caremark Corporation (NYSE:CVS). All of these stocks are in the drug stores industry and their market caps are closest to WAG’s market cap.