Is Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) worth your attention right now? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience
If you’d ask most investors, hedge funds are assumed to be worthless, old investment tools of the past. While there are over 8000 funds with their doors open at present, we choose to focus on the bigwigs of this club, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total asset base, and by paying attention to their best equity investments, we have found a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as beneficial, positive insider trading sentiment is another way to break down the financial markets. Just as you’d expect, there are a number of motivations for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).
Consequently, it’s important to take a look at the recent action surrounding Schnitzer Steel Industries, Inc. (NASDAQ:SCHN).
How have hedgies been trading Schnitzer Steel Industries, Inc. (NASDAQ:SCHN)?
At the end of the first quarter, a total of 13 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes significantly.
According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the biggest position in Schnitzer Steel Industries, Inc. (NASDAQ:SCHN). Royce & Associates has a $93.9 million position in the stock, comprising 0.3% of its 13F portfolio. On Royce & Associates’s heels is Cliff Asness of AQR Capital Management, with a $8.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Ken Griffin’s Citadel Investment Group, and Joel Greenblatt’s Gotham Asset Management.
Seeing as Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) has faced declining sentiment from hedge fund managers, it’s safe to say that there is a sect of hedgies that elected to cut their full holdings at the end of the first quarter. It’s worth mentioning that Ian Simm’s Impax Asset Management said goodbye to the largest stake of the “upper crust” of funds we key on, worth an estimated $9.7 million in stock.. David Costen Haley’s fund, HBK Investments, also said goodbye to its stock, about $1.8 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Schnitzer Steel Industries, Inc. (NASDAQ:SCHN)?
Insider buying is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time frame, Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Schnitzer Steel Industries, Inc. (NASDAQ:SCHN). These stocks are Park-Ohio Holdings Corp. (NASDAQ:PKOH), AZZ Incorporated (NYSE:AZZ), A M Castle and Co (NYSE:CAS), Matthews International Corp (NASDAQ:MATW), and Haynes International, Inc. (NASDAQ:HAYN). All of these stocks are in the metal fabrication industry and their market caps match SCHN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Park-Ohio Holdings Corp. (NASDAQ:PKOH) | 5 | 2 | 6 |
| AZZ Incorporated (NYSE:AZZ) | 16 | 1 | 6 |
| A M Castle and Co (NYSE:CAS) | 10 | 1 | 2 |
| Matthews International Corp (NASDAQ:MATW) | 6 | 0 | 2 |
| Haynes International, Inc. (NASDAQ:HAYN) | 6 | 0 | 1 |
With the results shown by the aforementioned tactics, everyday investors should always monitor hedge fund and insider trading activity, and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) applies perfectly to this mantra.
