Is FreightCar America, Inc. (RAIL) Going to Burn These Hedge Funds?

FreightCar America, Inc. (NASDAQ:RAIL) was in 9 hedge funds’ portfolio at the end of the first quarter of 2013. RAIL investors should be aware of an increase in hedge fund sentiment of late. There were 8 hedge funds in our database with RAIL positions at the end of the previous quarter.

At the moment, there are dozens of methods market participants can use to watch stocks. Two of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best fund managers can outclass the market by a significant amount (see just how much).

Just as important, optimistic insider trading sentiment is another way to parse down the financial markets. Just as you’d expect, there are plenty of motivations for an upper level exec to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this strategy if investors know where to look (learn more here).

Consequently, let’s take a look at the recent action encompassing FreightCar America, Inc. (NASDAQ:RAIL).

What have hedge funds been doing with FreightCar America, Inc. (NASDAQ:RAIL)?

At Q1’s end, a total of 9 of the hedge funds we track were bullish in this stock, a change of 13% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in FreightCar America, Inc. (NASDAQ:RAIL), worth close to $13 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Joel Greenblatt of Gotham Asset Management, with a $2.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include Jim Simons’s Renaissance Technologies, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management.

Now, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the most outsized position in FreightCar America, Inc. (NASDAQ:RAIL). Millennium Management had 0.7 million invested in the company at the end of the quarter. David Cohen and Harold Levy’s Iridian Asset Management also initiated a $0.3 million position during the quarter.

How are insiders trading FreightCar America, Inc. (NASDAQ:RAIL)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past half-year. Over the last 180-day time period, FreightCar America, Inc. (NASDAQ:RAIL) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned research, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and FreightCar America, Inc. (NASDAQ:RAIL) is no exception.

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