Here is What Hedge Funds Think About L.B. Foster Company (FSTR)

L.B. Foster Company (NASDAQ:FSTR) was in 10 hedge funds’ portfolio at the end of March. FSTR has experienced a decrease in enthusiasm from smart money lately. There were 11 hedge funds in our database with FSTR holdings at the end of the previous quarter.

In the eyes of most traders, hedge funds are assumed to be slow, outdated investment tools of the past. While there are more than 8000 funds in operation at the moment, we hone in on the masters of this club, close to 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by watching their top stock picks, we have uncovered a number of investment strategies that have historically beaten the 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, optimistic insider trading activity is a second way to break down the investments you’re interested in. There are plenty of reasons for an executive to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this method if investors understand what to do (learn more here).

Keeping this in mind, we’re going to take a peek at the recent action regarding L.B. Foster Company (NASDAQ:FSTR).

How are hedge funds trading L.B. Foster Company (NASDAQ:FSTR)?

At the end of the first quarter, a total of 10 of the hedge funds we track were bullish in this stock, a change of -9% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the largest position in L.B. Foster Company (NASDAQ:FSTR). Royce & Associates has a $80.7 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by David Dreman of Dreman Value Management, with a $5.7 million position; 0.2% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Joel Greenblatt’s Gotham Asset Management, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.

Because L.B. Foster Company (NASDAQ:FSTR) has experienced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers who sold off their full holdings in Q1. At the top of the heap, Mike Vranos’s Ellington said goodbye to the largest position of all the hedgies we monitor, totaling an estimated $0.5 million in stock.. William Harnisch’s fund, Peconic Partners LLC, also sold off its stock, about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds in Q1.

What have insiders been doing with L.B. Foster Company (NASDAQ:FSTR)?

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, L.B. Foster Company (NASDAQ:FSTR) has seen 1 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 L.B. Foster Company (NASDAQ:FSTR). These stocks are China Armco Metals, Inc (NYSEAMEX:CNAM), Empire Resources Inc (NASDAQ:ERS), Macquarie Infrastructure Company LLC (NYSE:MIC), Global Partners LP (NYSE:GLP), and Aegean Marine Petroleum Network Inc. (NYSE:ANW). This group of stocks belong to the basic materials wholesale industry and their market caps are closest to FSTR’s market cap.

With the returns demonstrated by our tactics, everyday investors must always pay attention to hedge fund and insider trading activity, and L.B. Foster Company (NASDAQ:FSTR) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds