Federal-Mogul Corporation (FDML): Are Hedge Funds Right About This Stock?

Federal-Mogul Corporation (NASDAQ:FDML) was in 5 hedge funds’ portfolio at the end of the first quarter of 2013. FDML has seen a decrease in hedge fund interest recently. There were 6 hedge funds in our database with FDML positions at the end of the previous quarter.

To the average investor, there are dozens of metrics market participants can use to analyze the equity markets. A pair of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top money managers can outpace the S&P 500 by a solid amount (see just how much).

Equally as important, positive insider trading activity is another way to break down the investments you’re interested in. As the old adage goes: there are plenty of motivations for a bullish insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this method if investors know what to do (learn more here).

With all of this in mind, let’s take a glance at the latest action surrounding Federal-Mogul Corporation (NASDAQ:FDML).

What have hedge funds been doing with Federal-Mogul Corporation (NASDAQ:FDML)?

In preparation for this quarter, a total of 5 of the hedge funds we track held long positions in this stock, a change of -17% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Carl Icahn’s Icahn Capital LP had the most valuable position in Federal-Mogul Corporation (NASDAQ:FDML), worth close to $462.5 million, comprising 2.7% of its total 13F portfolio. On Icahn Capital LP’s heels is Mario Gabelli of GAMCO Investors, with a $23.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.

Seeing as Federal-Mogul Corporation (NASDAQ:FDML) has witnessed a declination in interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies that elected to cut their full holdings last quarter. At the top of the heap, D. E. Shaw’s D E Shaw sold off the biggest stake of the 450+ funds we watch, worth about $0.3 million in stock.. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dumped its call options., about $0 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds last quarter.

How have insiders been trading Federal-Mogul Corporation (NASDAQ:FDML)?

Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past 180 days. Over the latest 180-day time frame, Federal-Mogul Corporation (NASDAQ:FDML) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Federal-Mogul Corporation (NASDAQ:FDML). These stocks are Meritor Inc (NYSE:MTOR), Superior Industries International Inc. (NYSE:SUP), Gentherm Inc (NASDAQ:THRM), Standard Motor Products, Inc. (NYSE:SMP), and Remy International Inc (NASDAQ:REMY). This group of stocks are the members of the auto parts industry and their market caps are closest to FDML’s market cap.

With the results exhibited by our strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Federal-Mogul Corporation (NASDAQ:FDML) is no exception.

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