Should You Buy Great Lakes Dredge & Dock Corporation (GLDD)?

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) investors should pay attention to an increase in hedge fund sentiment of late.

In the eyes of most stock holders, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey look at the masters of this club, close to 450 funds. It is estimated that this group has its hands on most of the smart money’s total capital, and by tracking their top stock picks, we have found a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as important, optimistic insider trading sentiment is another way to break down the investments you’re interested in. Obviously, there are a number of motivations for an executive to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this tactic if you know where to look (learn more here).

Consequently, it’s important to take a gander at the latest action regarding Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD).

Hedge fund activity in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)

In preparation for this quarter, a total of 17 of the hedge funds we track were bullish in this stock, a change of 6% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially.

Of the funds we track, Moab Capital Partners, managed by Michael M. Rothenberg and David Sackler, holds the most valuable position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). Moab Capital Partners has a $13.6 million position in the stock, comprising 7% of its 13F portfolio. The second largest stake is held by Matthew Hulsizer of PEAK6 Capital Management, with a $4.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Roger Keith Long’s Otter Creek Management, Phil Frohlich’s Prescott Group Capital Management and Jim Simons’s Renaissance Technologies.

Consequently, specific money managers were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, created the most outsized position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). PEAK6 Capital Management had 4.4 million invested in the company at the end of the quarter. Phil Frohlich’s Prescott Group Capital Management also made a $3.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management, Ken Gray and Steve Walsh’s Bryn Mawr Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

What have insiders been doing with Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)?

Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time period, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) has seen 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). These stocks are Argan, Inc. (NYSEAMEX:AGX), Dycom Industries, Inc. (NYSE:DY), Orion Marine Group, Inc. (NYSE:ORN), Layne Christensen Company (NASDAQ:LAYN), and Matrix Service Co (NASDAQ:MTRX). This group of stocks are in the heavy construction industry and their market caps are similar to GLDD’s market cap.