Should You Avoid NACCO Industries, Inc. (NC)?

NACCO Industries, Inc. (NYSE:NC) was in 8 hedge funds’ portfolio at the end of the first quarter of 2013. NC shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 8 hedge funds in our database with NC holdings at the end of the previous quarter.

At the moment, there are tons of metrics shareholders can use to track their holdings. Two of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a very impressive margin (see just how much).

Equally as beneficial, positive insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are a number of stimuli for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this strategy if “monkeys” understand what to do (learn more here).

With all of this in mind, it’s important to take a gander at the latest action regarding NACCO Industries, Inc. (NYSE:NC).

Hedge fund activity in NACCO Industries, Inc. (NYSE:NC)

At the end of the first quarter, a total of 8 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.

Of the funds we track, Cliff Asness’s AQR Capital Management had the biggest position in NACCO Industries, Inc. (NYSE:NC), worth close to $5.8 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Michael M. Rothenberg and David Sackler of Moab Capital Partners, with a $1.4 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Because NACCO Industries, Inc. (NYSE:NC) has faced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedgies that slashed their full holdings in Q1. Intriguingly, David Dreman’s Dreman Value Management dumped the largest stake of all the hedgies we key on, totaling about $2.4 million in stock., and Ken Gray and Steve Walsh of Bryn Mawr Capital was right behind this move, as the fund cut about $0.5 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in NACCO Industries, Inc. (NYSE:NC)

Bullish insider trading is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest 180-day time frame, NACCO Industries, Inc. (NYSE:NC) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to NACCO Industries, Inc. (NYSE:NC). These stocks are Lindsay Corporation (NYSE:LNN), Astec Industries, Inc. (NASDAQ:ASTE), Cascade Corporation (NYSE:CASC), Alamo Group, Inc. (NYSE:ALG), and Columbus McKinnon Corp. (NASDAQ:CMCO). This group of stocks belong to the farm & construction machinery industry and their market caps match NC’s market cap.