Do Hedge Funds and Insiders Love Axiall Corp (AXLL)?

Axiall Corp (NYSE:AXLL) investors should be aware of an increase in hedge fund sentiment recently.

If you’d ask most investors, hedge funds are perceived as underperforming, outdated financial tools of years past. While there are over 8000 funds trading at present, we hone in on the upper echelon of this group, about 450 funds. Most estimates calculate that this group controls the majority of the hedge fund industry’s total asset base, and by tracking their best equity investments, we have found a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as integral, optimistic insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are plenty of incentives for a bullish insider to cut shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the impressive potential of this strategy if shareholders understand what to do (learn more here).

With these “truths” under our belt, we’re going to take a glance at the recent action regarding Axiall Corp (NYSE:AXLL).

Hedge fund activity in Axiall Corp (NYSE:AXLL)

In preparation for this quarter, a total of 35 of the hedge funds we track were bullish in this stock, a change of 1067% from the first quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Discovery Capital Management, managed by Rob Citrone, holds the biggest position in Axiall Corp (NYSE:AXLL). Discovery Capital Management has a $138 million position in the stock, comprising 1.8% of its 13F portfolio. The second largest stake is held by Eric Bannasch of Cadian Capital, with a $88.2 million position; 2.4% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Jeffrey Vinik’s Vinik Asset Management, Donald Chiboucis’s Columbus Circle Investors and Ken Griffin’s Citadel Investment Group.

As industrywide interest jumped, specific money managers were breaking ground themselves. Discovery Capital Management, managed by Rob Citrone, initiated the largest position in Axiall Corp (NYSE:AXLL). Discovery Capital Management had 138 million invested in the company at the end of the quarter. Eric Bannasch’s Cadian Capital also initiated a $88.2 million position during the quarter. The following funds were also among the new AXLL investors: Jeffrey Vinik’s Vinik Asset Management, Ken Griffin’s Citadel Investment Group, and Leon Cooperman’s Omega Advisors.

What have insiders been doing with Axiall Corp (NYSE:AXLL)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Axiall Corp (NYSE:AXLL) has experienced 2 unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Axiall Corp (NYSE:AXLL). These stocks are Hawkins, Inc. (NASDAQ:HWKN), Praxair, Inc. (NYSE:PX), Minerals Technologies Inc (NYSE:MTX), and Tronox Ltd (NYSE:TROX). This group of stocks are in the synthetics industry and their market caps are similar to AXLL’s market cap.