Is Alpha Natural Resources, Inc. (NYSE:ANR) a buy?
If you were to ask many of your peers, hedge funds are viewed as overrated, outdated financial tools of a forgotten age. Although there are over 8,000 hedge funds in operation in present day, Insider Monkey looks at the masters of this club, close to 525 funds. Analysts calculate that this group oversees the majority of the hedge fund industry’s total assets, and by watching their highest quality stock picks, we’ve unsheathed 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 outclassed the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as useful, positive insider trading activity is another way to analyze the financial markets. Just as you’d expect, there are many motivations for an insider to drop shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this tactic if piggybackers understand where to look (learn more here).
Thus, let’s study the recent info surrounding Alpha Natural Resources, Inc. (NYSE:ANR).
What have hedge funds been doing with Alpha Natural Resources, Inc. (NYSE:ANR)?
In preparation for the third quarter, a total of 23 of the hedge funds we track were bullish in this stock, a change of 5% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly.
According to our 13F database, Steelhead Partners, managed by Michael Johnston, holds the biggest position in Alpha Natural Resources, Inc. (NYSE:ANR). Steelhead Partners has a $49.8 million position in the stock, comprising 4.5% of its 13F portfolio. On Steelhead Partners’s heels is Cliff Asness of AQR Capital Management, with a $23.9 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include John Paulson’s Paulson & Co, Jason Adler’s AlphaBet Management and Kevin Michael Ulrich’s Anchorage Advisors.
Now, particular hedge funds were breaking ground themselves. Steelhead Partners, managed by Michael Johnston, assembled the most valuable position in Alpha Natural Resources, Inc. (NYSE:ANR). Steelhead Partners had 49.8 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $23.9 million investment in the stock during the quarter. The other funds with new positions in the stock are John Paulson’s Paulson & Co, Jason Adler’s AlphaBet Management, and Kevin Michael Ulrich’s Anchorage Advisors.
What do corporate executives and insiders think about Alpha Natural Resources, Inc. (NYSE:ANR)?
Legal insider trading, particularly when it’s bullish, is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time period, Alpha Natural Resources, Inc. (NYSE:ANR) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Alpha Natural Resources, Inc. (NYSE:ANR). These stocks are Alliance Resource Partners, L.P. (NASDAQ:ARLP), PVR Partners LP (NYSE:PVR), Stillwater Mining Company (NYSE:SWC), HudBay Minerals Inc Ord Shs (NYSE:HBM), and Walter Energy, Inc. (NYSE:WLT). All of these stocks are in the industrial metals & minerals industry and their market caps are similar to ANR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Alliance Resource Partners, L.P. (NASDAQ:ARLP) | 5 | 0 | 1 |
| PVR Partners LP (NYSE:PVR) | 4 | 5 | 4 |
| Stillwater Mining Company (NYSE:SWC) | 16 | 1 | 7 |
| HudBay Minerals Inc Ord Shs (NYSE:HBM) | 0 | 0 | |
| Walter Energy, Inc. (NYSE:WLT) | 21 | 13 | 0 |
Using the returns explained by Insider Monkey’s strategies, regular investors should always watch hedge fund and insider trading sentiment, and Alpha Natural Resources, Inc. (NYSE:ANR) shareholders fit into this picture quite nicely.
