Here is What Hedge Funds Think About Darling International Inc. (DAR)

Darling International Inc. (NYSE:DAR) investors should be aware of an increase in enthusiasm from smart money of late.

If you’d ask most investors, hedge funds are perceived as unimportant, old financial tools of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey choose to focus on the masters of this group, close to 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total asset base, and by watching their best picks, we have uncovered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is another way to break down the investments you’re interested in. There are many incentives for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would buy. Many academic studies have demonstrated the impressive potential of this tactic if shareholders know where to look (learn more here).

Now, it’s important to take a look at the recent action regarding Darling International Inc. (NYSE:DAR).

What does the smart money think about Darling International Inc. (NYSE:DAR)?

Heading into Q2, a total of 16 of the hedge funds we track were long in this stock, a change of 7% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Gates Capital Management, managed by Jeffrey Gates, holds the biggest position in Darling International Inc. (NYSE:DAR). Gates Capital Management has a $87.5 million position in the stock, comprising 4.6% of its 13F portfolio. On Gates Capital Management’s heels is Ken Fisher of Fisher Asset Management, with a $62.7 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Chuck Royce’s Royce & Associates, Gregg J. Powers’s Private Capital Management and Martin Whitman’s Third Avenue Management.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, established the largest position in Darling International Inc. (NYSE:DAR). Millennium Management had 3 million invested in the company at the end of the quarter. Malcolm Fairbairn’s Ascend Capital also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Matthew Tewksbury’s Stevens Capital Management, and Mario Gabelli’s GAMCO Investors.

How have insiders been trading Darling International Inc. (NYSE:DAR)?

Insider buying is best served when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time period, Darling International Inc. (NYSE:DAR) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Darling International Inc. (NYSE:DAR). These stocks are Waste Connections, Inc. (NYSE:WCN), Heckmann Corporation (NYSE:HEK), Clean Harbors Inc (NYSE:CLH), Covanta Holding Corporation (NYSE:CVA), and Progressive Waste Solutions Ltd (USA) (NYSE:BIN). All of these stocks are in the waste management industry and their market caps resemble DAR’s market cap.

With the results demonstrated by our tactics, retail investors should always pay attention to hedge fund and insider trading sentiment, and Darling International Inc. (NYSE:DAR) applies perfectly to this mantra.

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