SAP AG (ADR) (SAP): Insiders Aren’t Crazy About It But Hedge Funds Love It
Is it smart to be bullish on SAP AG (ADR) (NYSE:SAP)?
In the eyes of many traders, hedge funds are viewed as overrated, outdated investment tools of an era lost to time. Although there are more than 8,000 hedge funds in operation today, Insider Monkey looks at the masters of this club, close to 525 funds. It is widely held that this group oversees most of all hedge funds' total capital, and by watching their best equity investments, we've unearthed a number of investment strategies that have historically outperformed Mr. Market. 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 outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as crucial, optimistic insider trading sentiment is a second way to look at the stock market universe. Just as you'd expect, there are a number of incentives for an executive to get rid of shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this tactic if "monkeys" know what to do (learn more here).
Keeping this in mind, let's examine the latest info surrounding SAP AG (ADR) (NYSE:SAP).
What does the smart money think about SAP AG (ADR) (NYSE:SAP)?
At Q2's end, a total of 12 of the hedge funds we track held long positions in this stock, a change of 20% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably.
According to our 13F database, Ken Fisher's Fisher Asset Management had the largest position in SAP AG (ADR) (NYSE:SAP), worth close to $453.8 million, accounting for 1.2% of its total 13F portfolio. Coming in second is Balestra, managed by James Melcher, which held a $35.8 million position; 9.7% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include Matthew Iorio's White Elm Capital, Jim Simons's Renaissance Technologies and Steven Cohen's SAC Capital Advisors.
As aggregate interest spiked, specific money managers have been driving this bullishness. Fisher Asset Management, managed by Ken Fisher, assembled the biggest position in SAP AG (ADR) (NYSE:SAP). Fisher Asset Management had 453.8 million invested in the company at the end of the quarter. James Melcher's Balestra also initiated a $35.8 million position during the quarter. The other funds with brand new SAP positions are Matthew Iorio's White Elm Capital, Jim Simons's Renaissance Technologies, and Steven Cohen's SAC Capital Advisors.
What do corporate executives and insiders think about SAP AG (ADR) (NYSE:SAP)?
Insider buying is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time frame, SAP AG (ADR) (NYSE:SAP) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to SAP AG (ADR) (NYSE:SAP). These stocks are Intuit Inc. (NASDAQ:INTU), Adobe Systems Incorporated (NASDAQ:ADBE), salesforce.com, inc. (NYSE:CRM), Microsoft Corporation (NASDAQ:MSFT), and Oracle Corporation (NYSE:ORCL). This group of stocks belong to the application software industry and their market caps are closest to SAP's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Intuit Inc. (NASDAQ:INTU)
Adobe Systems Incorporated (NASDAQ:ADBE)
salesforce.com, inc. (NYSE:CRM)
Microsoft Corporation (NASDAQ:MSFT)
Oracle Corporation (NYSE:ORCL)
Using the returns shown by Insider Monkey's research, average investors must always keep one eye on hedge fund and insider trading sentiment, and SAP AG (ADR) (NYSE:SAP) applies perfectly to this mantra.