Should You Sell Libbey Inc. (LBY)?

In the eyes of many of your peers, hedge funds are viewed as useless, old investment tools of an era lost to time. Although there are In excess of 8,000 hedge funds trading today, this site looks at the aristocrats of this club, about 525 funds. It is widely held that this group has its hands on most of all hedge funds’ total capital, and by tracking their highest quality stock picks, we’ve deciphered a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as crucial, optimistic insider trading activity is another way to analyze the investments you’re interested in. Just as you’d expect, there are a variety of motivations for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if shareholders know what to do (learn more here).

Thus, it’s important to study the newest info about Libbey Inc. (NYSEAMEX:LBY).

What have hedge funds been doing with Libbey Inc. (NYSEAMEX:LBY)?

At the end of the second quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially.

Out of the hedge funds we follow, 12 West Capital Management, managed by Joel Ramin, holds the most valuable position in Libbey Inc. (NYSEAMEX:LBY). 12 West Capital Management has a $20.1 million position in the stock, comprising 3.2% of its 13F portfolio. Sitting at the No. 2 spot is Richard S. Meisenberg of ACK Asset Management, with a $17.5 million position; 7.1% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Amy Minella’s Cardinal Capital, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.

Judging by the fact that Libbey Inc. (NYSEAMEX:LBY) has faced a fall in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds who were dropping their entire stakes in Q1. At the top of the heap, Joel Greenblatt’s Gotham Asset Management said goodbye to the biggest position of the 450+ funds we track, valued at about $0.5 million in stock, and Israel Englander of Millennium Management was right behind this move, as the fund cut about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Libbey Inc. (NYSEAMEX:LBY)?

Insider buying made by high-level executives is most useful when the company in focus has seen transactions within the past six months. Over the latest 180-day time frame, Libbey Inc. (NYSEAMEX:LBY) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Libbey Inc. (NYSEAMEX:LBY). These stocks are Newell Rubbermaid Inc. (NYSE:NWL), Jarden Corp (NYSE:JAH), Acme United Corporation (NYSEAMEX:ACU), Helen of Troy Limited (NASDAQ:HELE), and Lifetime Brands Inc (NASDAQ:LCUT). This group of stocks are in the housewares & accessories industry and their market caps are similar to LBY’s market cap.

Using the returns explained by the previously mentioned studies, average investors should always track hedge fund and insider trading sentiment, and Libbey Inc. (NYSEAMEX:LBY) applies perfectly to this mantra.

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