Wells Fargo & Co (NYSE:WFC) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late.
In the financial world, there are dozens of metrics shareholders can use to analyze Mr. Market. A couple of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the S&P 500 by a superb amount (see just how much).
Just as integral, optimistic insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are a number of stimuli for an executive to get rid of shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this strategy if investors know what to do (learn more here).
Keeping this in mind, let’s take a glance at the recent action regarding Wells Fargo & Co (NYSE:WFC).
What have hedge funds been doing with Wells Fargo & Co (NYSE:WFC)?
At Q1’s end, a total of 78 of the hedge funds we track held long positions in this stock, a change of -8% from the previous quarter.
Because Wells Fargo & Co (NYSE:WFC) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedge funds that elected to cut their positions entirely heading into 2013. It’s worth mentioning that Patrick Degorce’s fund cut the biggest stake of the 500+ funds we monitor, totaling about $64.9 million in call options, and Louis Bacon of Moore Global Investments was right behind this move, as the fund dropped about $64.8 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 7 funds heading into 2013.
How are insiders trading Wells Fargo & Co (NYSE:WFC)?
Insider buying is best served when the company in question has seen transactions within the past six months. Over the last 180-day time frame, Wells Fargo & Co (NYSE:WFC) has experienced zero unique insiders buying, and 7 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Wells Fargo & Co (NYSE:WFC). These stocks are Toronto-Dominion Bank (USA) (NYSE:TD), Mitsubishi UFJ Financial Group Inc (ADR) (NYSE:MTU), Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C), and JPMorgan Chase & Co. (NYSE:JPM). This group of stocks are the members of the money center banks industry and their market caps resemble WFC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Toronto-Dominion Bank (USA) (NYSE:TD) | 10 | 0 | 0 |
| Mitsubishi UFJ Financial Group Inc (ADR) (NYSE:MTU) | 8 | 0 | 0 |
| Bank of America Corp (NYSE:BAC) | 93 | 1 | 1 |
| Citigroup Inc. (NYSE:C) | 118 | 2 | 0 |
| JPMorgan Chase & Co. (NYSE:JPM) | 94 | 2 | 7 |
With the results demonstrated by our research, retail investors must always pay attention to hedge fund and insider trading sentiment, and Wells Fargo & Co (NYSE:WFC) shareholders fit into this picture quite nicely.
