FIX Should You Avoid Koninklijke Philips Electronics NV (ADR) (PHG)?
What's a smart Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) investor to do?
To many of your peers, hedge funds are viewed as useless, outdated investment tools of a period lost to current times. Although there are In excess of 8,000 hedge funds in operation today, Insider Monkey focuses on the aristocrats of this club, close to 525 funds. Analysts calculate that this group has its hands on most of the smart money's total capital, and by tracking their highest performing investments, we've deciphered a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as crucial, optimistic insider trading activity is a second way to analyze the marketplace. Just as you'd expect, there are plenty of stimuli for a corporate insider 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 valuable potential of this method if investors understand what to do (learn more here).
Now that that's out of the way, let's analyze the latest info about Koninklijke Philips Electronics NV (ADR) (NYSE:PHG).
How are hedge funds trading Koninklijke Philips Electronics NV (ADR) (NYSE:PHG)?
Heading into Q3, a total of 8 of the hedge funds we track were bullish in this stock, a change of -27% from one quarter earlier. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully.
According to our 13F database, Southeastern Asset Management, managed by Mason Hawkins, holds the largest position in Koninklijke Philips Electronics NV (ADR) (NYSE:PHG). Southeastern Asset Management has a $521.2 million position in the stock, comprising 2.6% of its 13F portfolio. The second largest stake is held by Matthew Tewksbury of Stevens Capital Management, with a $1.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include Steven Cohen's SAC Capital Advisors, Ken Griffin's Citadel Investment Group and Jim Simons's Renaissance Technologies.
As Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) has experienced a fall in interest from the smart money's best and brightest, logic holds that there exists a select few fund managers that elected to cut their positions entirely heading into Q2. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the largest position of all the hedgies we key on, totaling close to $27.7 million in stock. Andrew Sandler's fund, Sandler Capital Management, also dropped its stock, about $9.7 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds heading into Q2.
Insider trading activity in Koninklijke Philips Electronics NV (ADR) (NYSE:PHG)
Insider buying made by high-level executives is particularly usable when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also review the relationship between both of these indicators in other stocks similar to Koninklijke Philips Electronics NV (ADR) (NYSE:PHG). These stocks are Ingersoll-Rand PLC (NYSE:IR), Kubota Corp (ADR) (NYSE:KUB), Danaher Corporation (NYSE:DHR), Cummins Inc. (NYSE:CMI), and Illinois Tool Works Inc. (NYSE:ITW). This group of stocks are in the diversified machinery industry and their market caps resemble PHG's market cap. <!--nextpage-->
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Ingersoll-Rand PLC (NYSE:IR)
Kubota Corp (ADR) (NYSE:KUB)
Danaher Corporation (NYSE:DHR)
Cummins Inc. (NYSE:CMI)
Illinois Tool Works Inc. (NYSE:ITW)
Using the returns explained by our research, average investors must always pay attention to hedge fund and insider trading activity, and Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) is no exception.