Should You Buy FutureFuel Corp. (NYSE:FF)? – Landec Corporation (NASDAQ:LNDC), LSB Industries, Inc. (NYSE:LXU)

FutureFuel Corp. (NYSE:FF) was in 11 hedge funds’ portfolio at the end of the fourth quarter of 2012. FF investors should pay attention to an increase in hedge fund sentiment lately. There were 10 hedge funds in our database with FF holdings at the end of the previous quarter.

To the average investor, there are many gauges shareholders can use to analyze their holdings. A duo of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top money managers can outclass the broader indices by a significant margin (see just how much).

Equally as important, optimistic insider trading activity is a second way to break down the marketplace. Just as you’d expect, there are a number of reasons for an insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this tactic if “monkeys” know where to look (learn more here).

Keeping this in mind, let’s take a gander at the recent action regarding FutureFuel Corp. (NYSE:FF).

How are hedge funds trading FutureFuel Corp. (NYSE:FF)?

At the end of the fourth quarter, a total of 11 of the hedge funds we track were long in this stock, a change of 10% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Glenn Fuhrman and John Phelan’s MSD Capital had the most valuable position in FutureFuel Corp. (NYSE:FF), worth close to $31 million, accounting for 6.5% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $8 million position; the fund has 0% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Joel Greenblatt’s Gotham Asset Management.

Now, key hedge funds were breaking ground themselves. Hutchin Hill Capital, managed by Neil Chriss, initiated the biggest position in FutureFuel Corp. (NYSE:FF). Hutchin Hill Capital had 0 million invested in the company at the end of the quarter.

What do corporate executives and insiders think about FutureFuel Corp. (NYSE:FF)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the last 180-day time frame, FutureFuel Corp. (NYSE:FF) has seen 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to FutureFuel Corp. (NYSE:FF). These stocks are Aceto Corporation (NASDAQ:ACET), LSB Industries, Inc. (NYSE:LXU), Landec Corporation (NASDAQ:LNDC), Solazyme Inc (NASDAQ:SZYM), and Rentech, Inc. (NYSEAMEX:RTK). This group of stocks belong to the chemicals – major diversified industry and their market caps are closest to FF’s market cap.

With the results shown by our studies, retail investors should always pay attention to hedge fund and insider trading sentiment, and FutureFuel Corp. (NYSE:FF) applies perfectly to this mantra.

Click here to learn why you should track hedge funds