This Metric Says You Are Smart to Buy DFC Global Corp (DLLR)
Is DFC Global Corp (NASDAQ:DLLR) a buy?
If you were to ask many market players, hedge funds are viewed as bloated, outdated financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds with their doors open in present day, Insider Monkey looks at the crème de la crème of this club, close to 525 funds. It is assumed that this group controls the lion's share of the smart money's total capital, and by paying attention to their highest performing equity investments, we've revealed a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as useful, positive insider trading sentiment is a second way to analyze the financial markets. Obviously, there are lots of incentives for an executive to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).
Keeping this in mind, it's important to analyze the recent info about DFC Global Corp (NASDAQ:DLLR).
How are hedge funds trading DFC Global Corp (NASDAQ:DLLR)?
At Q2's end, a total of 13 of the hedge funds we track were long in this stock, a change of 30% from the previous quarter. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully.
When using filings from the hedgies we track, Quincy Lee's Ancient Art (Teton Capital) had the largest position in DFC Global Corp (NASDAQ:DLLR), worth close to $11.2 million, accounting for 3.1% of its total 13F portfolio. The second largest stake is held by Yale M. Fergang and Robert W. Medway of Royal Capital, with a $10.8 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Ken Griffin's Citadel Investment Group, Andy Redleaf's Whitebox Advisors and Peter S. Park's Park West Asset Management.
Consequently, specific money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in DFC Global Corp (NASDAQ:DLLR). Citadel Investment Group had 30 million invested in the company at the end of the quarter. Howard Marks's Oaktree Capital Management also initiated a $27.1 million position during the quarter. The other funds with brand new DLLR positions are Ken Griffin's Citadel Investment Group, Matthew Hulsizer's PEAK6 Capital Management, and Quincy Lee's Ancient Art (Teton Capital).
Insider trading activity in DFC Global Corp (NASDAQ:DLLR)
Insider buying made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time frame, DFC Global Corp (NASDAQ:DLLR) has seen zero unique insiders buying, and zero 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 DFC Global Corp (NASDAQ:DLLR). These stocks are PHH Corporation (NYSE:PHH), World Acceptance Corp. (NASDAQ:WRLD), Global Cash Access Holdings, Inc. (NYSE:GCA), Fifth Street Finance Corp. (NASDAQ:FSC), and NewStar Financial Inc (NASDAQ:NEWS). This group of stocks are the members of the credit services industry and their market caps are closest to DLLR's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
PHH Corporation (NYSE:PHH)
World Acceptance Corp. (NASDAQ:WRLD)
Global Cash Access Holdings, Inc. (NYSE:GCA)
Fifth Street Finance Corp. (NASDAQ:FSC)
NewStar Financial Inc (NASDAQ:NEWS)
Using the results shown by Insider Monkey's studies, regular investors should always watch hedge fund and insider trading activity, and DFC Global Corp (NASDAQ:DLLR) is no exception.