Hedge Funds Are Selling Buckeye Technologies Inc. (BKI)

Buckeye Technologies Inc. (NYSE:BKI) investors should pay attention to a decrease in support from the world’s most elite money managers of late.

In the eyes of most stock holders, hedge funds are seen as underperforming, old financial vehicles of the past. While there are more than 8000 funds trading at present, we at Insider Monkey look at the crème de la crème of this group, about 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total capital, and by monitoring their top picks, we have come up with a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 trumped 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 investments you’re interested in. Just as you’d expect, there are plenty of incentives for an insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if piggybackers know where to look (learn more here).

Now, it’s important to take a glance at the key action surrounding Buckeye Technologies Inc. (NYSE:BKI).

What have hedge funds been doing with Buckeye Technologies Inc. (NYSE:BKI)?

Heading into Q2, a total of 5 of the hedge funds we track were long in this stock, a change of -29% from the previous quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings substantially.

Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in Buckeye Technologies Inc. (NYSE:BKI), worth close to $48.6 million, accounting for 0.1% of its total 13F portfolio. Coming in second is John Fichthorn of Dialectic Capital Management, with a $3.1 million position; 0.4% of its 13F portfolio is allocated to the stock. Other peers that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, and Ken Griffin’s Citadel Investment Group.

Because Buckeye Technologies Inc. (NYSE:BKI) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few funds that decided to sell off their entire stakes last quarter. Interestingly, Jim Simons’s Renaissance Technologies dumped the largest position of the “upper crust” of funds we key on, worth an estimated $1 million in stock., and D. E. Shaw of D E Shaw was right behind this move, as the fund sold off about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.

Insider trading activity in Buckeye Technologies Inc. (NYSE:BKI)

Insider buying is at its handiest when the company in question has seen transactions within the past six months. Over the last six-month time frame, Buckeye Technologies Inc. (NYSE:BKI) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Buckeye Technologies Inc. (NYSE:BKI). These stocks are Resolute Forest Products Inc (NYSE:RFP), P.H. Glatfelter Company (NYSE:GLT), KapStone Paper and Packaging Corp. (NYSE:KS), Schweitzer-Mauduit International, Inc. (NYSE:SWM), and Clearwater Paper Corp (NYSE:CLW). This group of stocks are the members of the paper & paper products industry and their market caps resemble BKI’s market cap.

With the returns shown by our strategies, everyday investors should always monitor hedge fund and insider trading activity, and Buckeye Technologies Inc. (NYSE:BKI) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds