To most investors, hedge funds are assumed to be slow, old investment vehicles of the past. While there are more than 8000 funds in operation today, we at Insider Monkey choose to focus on the upper echelon of this club, around 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total capital, and by watching their highest performing stock picks, we have formulated a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 the details here).
Equally as important, positive insider trading sentiment is another way to parse down the investments you’re interested in. Just as you’d expect, there are a number of motivations for a bullish insider to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this method if you understand what to do (learn more here).
With all of this in mind, let’s take a gander at the recent action regarding Noranda Aluminum Holding Corporation (NYSE:NOR).
How have hedgies been trading Noranda Aluminum Holding Corporation (NYSE:NOR)?
In preparation for this quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 10% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably.
Of the funds we track, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Noranda Aluminum Holding Corporation (NYSE:NOR). D E Shaw has a $5.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On D E Shaw’s heels is AQR Capital Management, managed by Cliff Asness, which held a $2.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, created the biggest position in Noranda Aluminum Holding Corporation (NYSE:NOR). Highbridge Capital Management had 0.8 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
What do corporate executives and insiders think about Noranda Aluminum Holding Corporation (NYSE:NOR)?
Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time frame, Noranda Aluminum Holding Corporation (NYSE:NOR) has seen 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the results demonstrated by the aforementioned studies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Noranda Aluminum Holding Corporation (NYSE:NOR) is no exception.
