Should You Buy Globe Specialty Metals, Inc. (GSM)?

Should Globe Specialty Metals, Inc. (NASDAQ:GSM) investors track the following data?

In today’s marketplace, there are plenty of indicators market participants can use to watch stocks. Some of the most innovative 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 elite fund managers can outpace the S&P 500 by a very impressive margin (see just how much).

Equally as key, optimistic insider trading sentiment is a second way to look at the marketplace. As the old adage goes: there are plenty of incentives for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this strategy if “monkeys” know what to do (learn more here).

Keeping this in mind, we’re going to study the recent info for Globe Specialty Metals, Inc. (NASDAQ:GSM).

What have hedge funds been doing with Globe Specialty Metals, Inc. (NASDAQ:GSM)?

Heading into Q3, a total of 13 of the hedge funds we track were long in this stock, a change of 30% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully.

When using filings from the hedgies we track, Chuck Royce’s Royce & Associates had the biggest position in Globe Specialty Metals, Inc. (NASDAQ:GSM), worth close to $108.1 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Blue Harbour Group, managed by Clifton S. Robbins, which held a $69.3 million position; 5.3% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Jay Petschek and Steven Major’s Corsair Capital Management, Richard Chilton’s Chilton Investment Company and Israel Englander’s Millennium Management.

As industrywide interest increased, particular hedge funds have been driving this bullishness. Royce & Associates, managed by Chuck Royce, initiated the most valuable position in Globe Specialty Metals, Inc. (NASDAQ:GSM). Royce & Associates had 108.1 million invested in the company at the end of the quarter. Clifton S. Robbins’s Blue Harbour Group also initiated a $69.3 million position during the quarter. The following funds were also among the new GSM investors: Jay Petschek and Steven Major’s Corsair Capital Management, Richard Chilton’s Chilton Investment Company, and Israel Englander’s Millennium Management.

Insider trading activity in Globe Specialty Metals, Inc. (NASDAQ:GSM)

Bullish insider trading is most useful when the company in question has seen transactions within the past half-year. Over the last half-year time period, Globe Specialty Metals, Inc. (NASDAQ:GSM) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Globe Specialty Metals, Inc. (NASDAQ:GSM). These stocks are Stillwater Mining Company (NYSE:SWC), U.S. Silica Holdings Inc (NYSE:SLCA), Arch Coal Inc (NYSE:ACI), Cloud Peak Energy Inc. (NYSE:CLD), and AMCOL International Corporation (NYSE:ACO). All of these stocks are in the industrial metals & minerals industry and their market caps resemble GSM’s market cap.

Using the results demonstrated by the previously mentioned tactics, regular investors should always watch hedge fund and insider trading activity, and Globe Specialty Metals, Inc. (NASDAQ:GSM) shareholders fit into this picture quite nicely.

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