Do Hedge Funds and Insiders Love Alexco Resource Corp. (USA) (AXU)?

Is Alexco Resource Corp. (USA) (NYSEAMEX:AXU) a buy right now? The smart money is in an optimistic mood. The number of long hedge fund bets inched up by 1 lately.

If you’d ask most shareholders, hedge funds are assumed to be slow, outdated financial tools of years past. While there are greater than 8000 funds with their doors open today, we hone in on the top tier of this club, close to 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by monitoring their highest performing picks, we have brought to light a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 23.3 percentage points in 8 months (see all of our picks from August).

Equally as key, optimistic insider trading activity is a second way to parse down the stock market universe. There are a variety of reasons for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this tactic if you know where to look (learn more here).

Now, we’re going to take a look at the key action encompassing Alexco Resource Corp. (USA) (NYSEAMEX:AXU).

How have hedgies been trading Alexco Resource Corp. (USA) (NYSEAMEX:AXU)?

In preparation for this quarter, a total of 7 of the hedge funds we track held long positions in this stock, a change of 17% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Sprott Asset Management, managed by Eric Sprott, holds the most valuable position in Alexco Resource Corp. (USA) (NYSEAMEX:AXU). Sprott Asset Management has a $20.7 million position in the stock, comprising 2.7% of its 13F portfolio. On Sprott Asset Management’s heels is Weiss Asset Management, managed by Andrew Weiss, which held a $6.9 million position; 4.9% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and Matthew Hulsizer’s PEAK6 Capital Management.

Consequently, key hedge funds were leading the bulls’ herd. Weiss Asset Management, managed by Andrew Weiss, assembled the biggest position in Alexco Resource Corp. (USA) (NYSEAMEX:AXU). Weiss Asset Management had 6.9 million invested in the company at the end of the quarter.

How are insiders trading Alexco Resource Corp. (USA) (NYSEAMEX:AXU)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest 180-day time frame, Alexco Resource Corp. (USA) (NYSEAMEX:AXU) 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 Alexco Resource Corp. (USA) (NYSEAMEX:AXU). These stocks are L&L Energy, Inc. (NASDAQ:LLEN), Mountain Province Diamonds, Inc. (NYSEAMEX:MDM), Rhino Resource Partners, L.P. (NYSE:RNO), Westmoreland Coal Company (NASDAQ:WLB), and Hallador Energy Co (NASDAQ:HNRG). All of these stocks are in the nonmetallic mineral mining industry and their market caps are closest to AXU’s market cap.

With the returns shown by the aforementioned time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Alexco Resource Corp. (USA) (NYSEAMEX:AXU) is an important part of this process.

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