If you’d ask most investors, hedge funds are seen as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds trading today, we look at the elite of this club, about 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by monitoring their highest performing equity investments, we have unearthed a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as integral, bullish insider trading sentiment is another way to parse down the financial markets. There are plenty of stimuli for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this method if shareholders understand where to look (learn more here).
Keeping this in mind, we’re going to take a gander at the latest action regarding AAON, Inc. (NASDAQ:AAON).
How have hedgies been trading AAON, Inc. (NASDAQ:AAON)?
At Q1’s end, a total of 10 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully.
When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in AAON, Inc. (NASDAQ:AAON). Royce & Associates has a $43.9 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $2.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Joel Greenblatt’s Gotham Asset Management, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.
Seeing as AAON, Inc. (NASDAQ:AAON) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds that decided to sell off their positions entirely last quarter. Interestingly, Glenn Russell Dubin’s Highbridge Capital Management dropped the biggest investment of all the hedgies we key on, worth an estimated $0.8 million in stock., and Ken Brodkowitz and Mike Vermut of Newland Capital was right behind this move, as the fund cut about $0.6 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in AAON, Inc. (NASDAQ:AAON)
Insider buying is at its handiest when the company in focus has experienced transactions within the past six months. Over the last six-month time period, AAON, Inc. (NASDAQ:AAON) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to AAON, Inc. (NASDAQ:AAON). These stocks are Apogee Enterprises, Inc. (NASDAQ:APOG), Headwaters Inc (NYSE:HW), Universal Forest Products, Inc. (NASDAQ:UFPI), Quanex Building Products Corporation (NYSE:NX), and Griffon Corporation (NYSE:GFF). All of these stocks are in the general building materials industry and their market caps match AAON’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Apogee Enterprises, Inc. (NASDAQ:APOG) | 10 | 0 | 2 |
| Headwaters Inc (NYSE:HW) | 20 | 0 | 2 |
| Universal Forest Products, Inc. (NASDAQ:UFPI) | 5 | 0 | 4 |
| Quanex Building Products Corporation (NYSE:NX) | 11 | 0 | 0 |
| Griffon Corporation (NYSE:GFF) | 13 | 1 | 0 |
With the results shown by our studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and AAON, Inc. (NASDAQ:AAON) is no exception.
