Hedge Funds Are Crazy About FutureFuel Corp. (FF)

To many of your peers, hedge funds are assumed to be useless, outdated investment tools of an era lost to time. Although there are over 8,000 hedge funds with their doors open today, this site focuses on the leaders of this group, around 525 funds. It is widely held that this group oversees most of the hedge fund industry’s total capital, and by tracking their highest quality picks, we’ve found a few investment strategies that have historically outperformed the 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 (see all of our picks from August).

Just as necessary, bullish insider trading sentiment is a second way to look at the world of equities. As the old adage goes: there are a variety of reasons for an insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this strategy if piggybackers understand what to do (learn more here).

What’s more, it’s important to discuss the newest info surrounding FutureFuel Corp. (NYSE:FF).

How have hedgies been trading FutureFuel Corp. (NYSE:FF)?

In preparation for the third quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 10% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially.

When using filings from the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in FutureFuel Corp. (NYSE:FF). Royce & Associates has a $15.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $6.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Robert B. Gillam’s McKinley Capital Management, Glenn Fuhrman and John Phelan’s MSD Capital and D. E. Shaw’s D E Shaw.

As industrywide interest increased, specific money managers were breaking ground themselves. Royce & Associates, managed by Chuck Royce, established the most valuable position in FutureFuel Corp. (NYSE:FF). Royce & Associates had 15.3 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $6.2 million position during the quarter. The other funds with brand new FF positions are Robert B. Gillam’s McKinley Capital Management, Glenn Fuhrman and John Phelan’s MSD Capital, and D. E. Shaw’s D E Shaw.

Insider trading activity in FutureFuel Corp. (NYSE:FF)

Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last six-month time period, FutureFuel Corp. (NYSE:FF) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to FutureFuel Corp. (NYSE:FF). These stocks are Aceto Corporation (NASDAQ:ACET), LSB Industries, Inc. (NYSE:LXU), Landec Corporation (NASDAQ:LNDC), Solazyme Inc (NASDAQ:SZYM), and Rentech, Inc. (NYSEAMEX:RTK). All of these stocks are in the chemicals – major diversified industry and their market caps match FF’s market cap.

Using the returns shown by Insider Monkey’s studies, average investors must always keep one eye on hedge fund and insider trading activity, and FutureFuel Corp. (NYSE:FF) is an important part of this process.

Discover how hedge fund piggybacking can benefit you