Is it smart to be bullish on HORSEHEAD HOLDING CORP. (NASDAQ:ZINC)?
If you were to ask many market players, hedge funds are perceived as delayed, old investment vehicles of a forgotten age. Although there are over 8,000 hedge funds with their doors open today, Insider Monkey looks at the bigwigs of this group, close to 525 funds. Analysts calculate that this group oversees the lion’s share of the hedge fund industry’s total assets, and by keeping an eye on their highest performing stock picks, we’ve brought to light a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped 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 topped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as key, optimistic insider trading activity is another way to look at the stock market universe. As the old adage goes: there are plenty of incentives for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this tactic if shareholders understand what to do (learn more here).
Keeping this in mind, let’s analyze the latest info for HORSEHEAD HOLDING CORP. (NASDAQ:ZINC).
What have hedge funds been doing with HORSEHEAD HOLDING CORP. (NASDAQ:ZINC)?
In preparation for the third quarter, a total of 8 of the hedge funds we track were long in this stock, a change of -27% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes substantially.
As HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) has experienced declining interest from the entirety of the hedge funds we track, logic holds that there were a few money managers who sold off their positions entirely in Q1. It’s worth mentioning that Abby Flamholz and Yehuda Blinder’s ADAR Investment Management dumped the largest investment of all the hedgies we monitor, totaling close to $11.3 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $0.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds in Q1.
What do corporate executives and insiders think about HORSEHEAD HOLDING CORP. (NASDAQ:ZINC)?
Insider buying made by high-level executives is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the last six-month time frame, HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to HORSEHEAD HOLDING CORP. (NASDAQ:ZINC). These stocks are Denison Mines Corp (USA) (NYSEAMEX:DNN), Molycorp Inc (NYSE:MCP), Taseko Mines Limited (USA) (NYSEAMEX:TGB), Thompson Creek Metals Company Inc (USA) (NYSE:TC), and Hi-Crush Partners LP (NYSE:HCLP). This group of stocks are in the industrial metals & minerals industry and their market caps are closest to ZINC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Denison Mines Corp (USA) (NYSEAMEX:DNN) | 9 | 0 | 0 |
| Molycorp Inc (NYSE:MCP) | 16 | 0 | 0 |
| Taseko Mines Limited (USA) (NYSEAMEX:TGB) | 3 | 0 | 0 |
| Thompson Creek Metals Company Inc (USA) (NYSE:TC) | 10 | 0 | 0 |
| Hi-Crush Partners LP (NYSE:HCLP) | 3 | 0 | 0 |
Using the returns demonstrated by the previously mentioned analyses, average investors should always keep one eye on hedge fund and insider trading sentiment, and HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) shareholders fit into this picture quite nicely.
