Yahoo! Inc. (NASDAQ:YHOO) has been a trendy pick among many investors, and shares have ballooned in 2013. Hedge funds, though, seem like their standing pat, electing not to add more YHOO shares of late.
If you were to ask many market players, hedge funds are viewed as delayed, outdated financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds trading in present day, Insider Monkey focuses on the moguls of this club, close to 525 funds. It is widely held that this group oversees the lion’s share of the smart money’s total capital, and by paying attention to their best investments, we’ve deciphered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as useful, bullish insider trading sentiment is another way to analyze the marketplace. Just as you’d expect, there are plenty of stimuli for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the useful potential of this tactic if piggybackers understand where to look (learn more here).
Now that that’s out of the way, it’s important to examine the latest info for Yahoo! Inc. (NASDAQ:YHOO).
How have hedgies been trading Yahoo! Inc. (NASDAQ:YHOO)?
In preparation for the third quarter, a total of 66 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially.
According to our 13F database, Third Point, managed by Dan Loeb, holds the biggest position in Yahoo! Inc. (NASDAQ:YHOO). Third Point has a $1.5581 billion position in the stock, comprising 35.3% of its 13F portfolio. Sitting at the No. 2 spot is Farallon Capital, managed by Andrew J. M. Spokes, which held a $283.1 million position; 5.4% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Cliff Asness’s AQR Capital Management, James Dinan’s York Capital Management and John Thaler’s JAT Capital Management.
As Yahoo! Inc. (NASDAQ:YHOO) has witnessed dropping sentiment from upper-tier hedge fund managers, it’s safe to say that there is a sect of hedge funds who sold off their positions entirely heading into Q2. Intriguingly, Michael Lowenstein’s Kensico Capital dumped the largest stake of the “upper crust” of funds we track, totaling close to $106 million in stock. Christopher MedlockáJames’s fund, Partner Fund Management, also sold off its stock, about $63 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Yahoo! Inc. (NASDAQ:YHOO)
Insider buying is best served when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time period, Yahoo! Inc. (NASDAQ:YHOO) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Yahoo! Inc. (NASDAQ:YHOO). These stocks are Tripadvisor Inc (NASDAQ:TRIP), Yandex NV (NASDAQ:YNDX), Facebook Inc (NASDAQ:FB), LinkedIn Corp (NYSE:LNKD), and Baidu.com, Inc. (ADR) (NASDAQ:BIDU). This group of stocks are in the internet information providers industry and their market caps match YHOO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Tripadvisor Inc (NASDAQ:TRIP) | 42 | 0 | 0 |
| Yandex NV (NASDAQ:YNDX) | 19 | 0 | 0 |
| Facebook Inc (NASDAQ:FB) | 48 | 0 | 9 |
| LinkedIn Corp (NYSE:LNKD) | 45 | 0 | 13 |
| Baidu.com, Inc. (ADR) (NASDAQ:BIDU) | 34 | 0 | 0 |
Using the results explained by Insider Monkey’s studies, regular investors must always track hedge fund and insider trading sentiment, and Yahoo! Inc. (NASDAQ:YHOO) is an important part of this process.
