Sony Corporation (ADR) (SNE): Are Hedge Funds Right About This Stock?

Sony Corporation (ADR) (NYSE:SNE) has seen an increase in hedge fund interest lately. SNE was in 29 hedge funds’ portfolio at the end of the third quarter of 2013. There were 24 hedge funds in our database with SNE holdings at the end of the previous quarter.

According to most shareholders, hedge funds are perceived as worthless, old investment vehicles of years past. While there are more than 8000 funds in operation at the moment, we look at the upper echelon of this group, about 450 funds. Most estimates calculate that this group controls most of the smart money’s total capital, and by paying attention to their highest performing picks, we have discovered a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 (check out a sample of our picks).

Sony Corporation (ADR) (NYSE:SNE)Just as key, optimistic insider trading activity is a second way to parse down the stock market universe. There are lots of reasons for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the key action surrounding Sony Corporation (ADR) (NYSE:SNE).

What have hedge funds been doing with Sony Corporation (ADR) (NYSE:SNE)?

At the end of the second quarter, a total of 29 of the hedge funds we track were bullish in this stock, a change of 21% from the second quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.

Of the funds we track, Panayotis Takis Sparaggis’s Alkeon Capital Management had the most valuable position in Sony Corporation (ADR) (NYSE:SNE), worth close to $72.6 million, accounting for 1.4% of its total 13F portfolio. The second largest stake is held by York Capital Management, managed by James Dinan, which held a $65.2 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, Jim Simons’s Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Sony Corporation (ADR) (NYSE:SNE). Arrowstreet Capital had 27.1 million invested in the company at the end of the quarter. Stephen V. Raneri’s LionEye Capital Management also initiated a $11.6 million position during the quarter. The other funds with brand new SNE positions are Kenneth Mario Garschina’s Mason Capital Management, Scott Fine and Peter Richards’s Empire Capital Management, and Matthew Tewksbury’s Stevens Capital Management.

What do corporate executives and insiders think about Sony Corporation (ADR) (NYSE:SNE)?

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time period, Sony Corporation (ADR) (NYSE:SNE) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Sony Corporation (ADR) (NYSE:SNE). These stocks are Universal Electronics Inc (NASDAQ:UEIC), Fabrinet (NYSE:FN), Spectrum Brands Holdings, Inc. (NYSE:SPB), Harman International Industries Inc./DE/ (NYSE:HAR), and Panasonic Corporation (ADR) (NYSE:PC). This group of stocks are in the electronic equipment industry and their market caps match SNE’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Universal Electronics Inc (NASDAQ:UEIC) 14 0 7
Fabrinet (NYSE:FN) 16 0 6
Spectrum Brands Holdings, Inc. (NYSE:SPB) 20 1 1
Harman International Industries Inc./DE/ (NYSE:HAR) 29 0 13
Panasonic Corporation (ADR) (NYSE:PC) 0 0

With the results exhibited by our research, everyday investors should always monitor hedge fund and insider trading activity, and Sony Corporation (ADR) (NYSE:SNE) shareholders fit into this picture quite nicely.



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