Should You Avoid Schweitzer-Mauduit International, Inc. (SWM)?

Schweitzer-Mauduit International, Inc. (NYSE:SWM) has experienced a decrease in hedge fund interest lately.

In the eyes of most traders, hedge funds are seen as worthless, old financial tools of the past. While there are over 8000 funds trading today, we at Insider Monkey look at the moguls of this club, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total capital, and by monitoring their highest performing picks, we have discovered a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is a second way to break down the stock market universe. Obviously, there are a number of stimuli for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this method if you understand where to look (learn more here).

With these “truths” under our belt, we’re going to take a gander at the latest action regarding Schweitzer-Mauduit International, Inc. (NYSE:SWM).

What does the smart money think about Schweitzer-Mauduit International, Inc. (NYSE:SWM)?

Heading into Q2, a total of 14 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the biggest position in Schweitzer-Mauduit International, Inc. (NYSE:SWM). Royce & Associates has a $47.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $9.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish include Ken Griffin’s Citadel Investment Group, Joel Greenblatt’s Gotham Asset Management and Andrew R. Midler’s Savitr Capital.

Due to the fact that Schweitzer-Mauduit International, Inc. (NYSE:SWM) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers who sold off their full holdings in Q1. It’s worth mentioning that Jay Petschek and Steven Major’s Corsair Capital Management dumped the biggest stake of all the hedgies we monitor, worth about $2.4 million in stock., and John Overdeck and David Siegel of Two Sigma Advisors was right behind this move, as the fund dropped about $1.3 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Schweitzer-Mauduit International, Inc. (NYSE:SWM)

Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, Schweitzer-Mauduit International, Inc. (NYSE:SWM) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Schweitzer-Mauduit International, Inc. (NYSE:SWM). These stocks are Resolute Forest Products Inc (NYSE:RFP), P.H. Glatfelter Company (NYSE:GLT), KapStone Paper and Packaging Corp. (NYSE:KS), Buckeye Technologies Inc. (NYSE:BKI), and Clearwater Paper Corp (NYSE:CLW). All of these stocks are in the paper & paper products industry and their market caps are closest to SWM’s market cap.