Hedge Funds Aren’t Crazy About Xerium Technologies, Inc. (XRM) Anymore

Xerium Technologies, Inc. (NYSE:XRM) was in 7 hedge funds’ portfolio at the end of the fourth quarter of 2012. XRM investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 9 hedge funds in our database with XRM positions at the end of the previous quarter.

In the financial world, there are a multitude of gauges market participants can use to watch Mr. Market. A duo of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can outperform the S&P 500 by a solid amount (see just how much).

Equally as key, bullish insider trading activity is another way to parse down the investments you’re interested in. As the old adage goes: there are many stimuli for an executive to drop shares of his or her company, but just one, very clear reason why they would buy. Many empirical studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, we’re going to take a glance at the recent action encompassing Xerium Technologies, Inc. (NYSE:XRM).

Hedge fund activity in Xerium Technologies, Inc. (NYSE:XRM)

At year’s end, a total of 7 of the hedge funds we track held long positions in this stock, a change of -22% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Eric Edidin and Josh Lobel’s Archer Capital Management had the largest position in Xerium Technologies, Inc. (NYSE:XRM), worth close to $1.7 million, accounting for 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Wilmot B. Harkey and Daniel Mack of Nantahala Capital Management, with a $1.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Jay Petschek and Steven Major’s Corsair Capital Management and Jim Simons’s Renaissance Technologies.

Judging by the fact that Xerium Technologies, Inc. (NYSE:XRM) has faced declining sentiment from hedge fund managers, it’s safe to say that there were a few hedge funds who were dropping their entire stakes in Q4. Interestingly, William Michaelcheck’s Mariner Investment Group dumped the biggest position of all the hedgies we track, comprising close to $0.4 million in stock., and Ben Levine, Andrew Manuel and Stefan Renold of LMR Partners was right behind this move, as the fund said goodbye to about $0 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds in Q4.

How are insiders trading Xerium Technologies, Inc. (NYSE:XRM)?

Insider purchases made by high-level executives is at its handiest when the company in focus has seen transactions within the past half-year. Over the last half-year time frame, Xerium Technologies, Inc. (NYSE:XRM) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Xerium Technologies, Inc. (NYSE:XRM). These stocks are Mercer International Inc. (NASDAQ:MERC), Tufco Technologies, Inc. (NASDAQ:TFCO), Orient Paper Inc (NYSEAMEX:ONP), Orchids Paper Products Company (NYSEAMEX:TIS), and Verso Paper Corp. (NYSE:VRS). This group of stocks are in the paper & paper products industry and their market caps resemble XRM’s market cap.