Hedge Funds Are Dumping Otter Tail Corporation (OTTR)

Otter Tail Corporation (NASDAQ:OTTR) investors should be aware of a decrease in activity from the world’s largest hedge funds lately.

In the eyes of most stock holders, hedge funds are seen as slow, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at present, we hone in on the bigwigs of this club, about 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total capital, and by keeping an eye on their top investments, we have identified a few investment strategies that have historically outpaced the market. 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 (check out a sample of our picks).

Just as important, positive insider trading activity is another way to parse down the stock market universe. Just as you’d expect, there are plenty of stimuli for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this strategy if you understand where to look (learn more here).

Keeping this in mind, let’s take a look at the latest action regarding Otter Tail Corporation (NASDAQ:OTTR).

How are hedge funds trading Otter Tail Corporation (NASDAQ:OTTR)?

Heading into Q2, a total of 6 of the hedge funds we track were bullish in this stock, a change of -14% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the largest position in Otter Tail Corporation (NASDAQ:OTTR), worth close to $9.5 million, accounting for 0.1% of its total 13F portfolio. On GAMCO Investors’s heels is AQR Capital Management, managed by Cliff Asness, which held a $6.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Joel Greenblatt’s Gotham Asset Management, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

Due to the fact that Otter Tail Corporation (NASDAQ:OTTR) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds that decided to sell off their entire stakes in Q1. Interestingly, Paul Tudor Jones’s Tudor Investment Corp said goodbye to the biggest position of all the hedgies we watch, valued at close to $0.3 million in stock., and Mike Vranos of Ellington was right behind this move, as the fund dropped about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds in Q1.

How have insiders been trading Otter Tail Corporation (NASDAQ:OTTR)?

Insider buying is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the last half-year time period, Otter Tail Corporation (NASDAQ:OTTR) has experienced zero unique insiders purchasing, and 3 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 Otter Tail Corporation (NASDAQ:OTTR). These stocks are Avista Corp (NYSE:AVA), NorthWestern Corp (NYSE:NWE), Just Energy Group, Inc. Ordinary Shares (Canada) (NYSE:JE), CH Energy Group Inc (NYSE:CHG), and MGE Energy, Inc. (NASDAQ:MGEE). This group of stocks are the members of the diversified utilities industry and their market caps are similar to OTTR’s market cap.