Analyzing the buying trends of "big money" investors like hedge funds becomes especially interesting when compared with price performance. Have hedge funds been making winning positions? If not, it opens up the question of whether hedge funds have been wrong, or whether they know something the market hasn't yet realized.
Winning streaks are one interesting angle to consider price performance.
Stocks with a persistence of days in which they recently outperformed the S&P 500 and little persistence in recently underperforming the S&P 500 benchmark are very likely surrounded by positive market sentiment.
To use these concepts, we ran a screen on recently "winning" stocks: those that have seen a persistence of days in which the stock beat the S&P 500 benchmark over the last month and little persistence in underperforming the S&P 500, i.e. long winning streaks and short losing streaks, as measured by a ratio of the longest winning streak to the longest losing streak.
We screened these winners for those seeing the opposite sentiment (bearishness) from institutional investors like hedge funds, with significant net institutional selling over the current quarter.
Clearly hedge funds disagree with the broader market -- do you think hedge funds are wrong, or do they know something the market hasn't yet priced in?
Use this list as a starting point for your own analysis.
List sorted alphabetically. (Click here to access free, interactive tools to analyze these ideas.)
List compiled by Eben Esterhuizen, CFA:
2. American Reprographics
5. Furiex Pharmaceuticals
6. Stream Global Services
7. Spreadtrum Communications
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Data from 11/14. Institutional data sourced from Fidelity, price data sourced from Yahoo! Finance.