In the eyes of most shareholders, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation today, we choose to focus on the masters of this club, around 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total asset base, and by watching their top investments, we have figured out a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to 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 all of our picks from August).
Equally as integral, bullish insider trading sentiment is a second way to parse down the financial markets. There are lots of reasons for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this method if investors know where to look (learn more here).
With these “truths” under our belt, let’s take a glance at the latest action regarding Netflix, Inc. (NASDAQ:NFLX).
How have hedgies been trading Netflix, Inc. (NASDAQ:NFLX)?
Heading into Q2, a total of 48 of the hedge funds we track were long in this stock, a change of 37% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Carl Icahn’s Icahn Capital LP had the most valuable position in Netflix, Inc. (NASDAQ:NFLX), worth close to $1.0495 billion, accounting for 6.2% of its total 13F portfolio. Coming in second is Philippe Laffont of Coatue Management, with a $255.8 million position; 3.2% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include John Griffin’s Blue Ridge Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Chase Coleman and Feroz Dewan’s Tiger Global Management LLC.
As industrywide interest jumped, specific money managers were breaking ground themselves. Blue Ridge Capital, managed by John Griffin, created the biggest position in Netflix, Inc. (NASDAQ:NFLX). Blue Ridge Capital had 189.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $130.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Chase Coleman and Feroz Dewan’s Tiger Global Management LLC, Daniel Benton’s Andor Capital Management, and Jim Simons’s Renaissance Technologies.
What have insiders been doing with Netflix, Inc. (NASDAQ:NFLX)?
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past half-year. Over the latest six-month time frame, Netflix, Inc. (NASDAQ:NFLX) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned time-tested strategies, everyday investors should always monitor hedge fund and insider trading activity, and Netflix, Inc. (NASDAQ:NFLX) applies perfectly to this mantra.
