Is Rockwood Holdings, Inc. (NYSE:ROC) a superb stock to buy now? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions decreased by 2 recently.
To most investors, hedge funds are assumed to be worthless, old investment tools of the past. While there are over 8000 funds with their doors open at present, we hone in on the upper echelon of this group, about 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by paying attention to their highest performing picks, we have formulated a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Just as important, optimistic insider trading sentiment is another way to parse down the world of equities. Obviously, there are a variety of motivations for an executive to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this tactic if you know what to do (learn more here).
Now, we’re going to take a look at the latest action encompassing Rockwood Holdings, Inc. (NYSE:ROC).
Hedge fund activity in Rockwood Holdings, Inc. (NYSE:ROC)
At Q1’s end, a total of 34 of the hedge funds we track were long in this stock, a change of -6% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the largest position in Rockwood Holdings, Inc. (NYSE:ROC). Iridian Asset Management has a $212.2 million position in the stock, comprising 3.1% of its 13F portfolio. Coming in second is Alexander Roepers of Atlantic Investment Management, with a $169.5 million position; 15.5% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include Jean-Marie Eveillard’s First Eagle Investment Management, Barry Rosenstein’s JANA Partners and Daniel S. Och’s OZ Management.
Due to the fact that Rockwood Holdings, Inc. (NYSE:ROC) has witnessed declining sentiment from hedge fund managers, logic holds that there exists a select few hedgies that decided to sell off their positions entirely in Q1. At the top of the heap, Rob Butts and Josh Clark’s Southpoint Capital Advisors dumped the largest investment of the “upper crust” of funds we watch, totaling about $51.6 million in stock., and Keith Meister of Corvex Capital was right behind this move, as the fund sold off about $27.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds in Q1.
How are insiders trading Rockwood Holdings, Inc. (NYSE:ROC)?
Insider buying is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time period, Rockwood Holdings, Inc. (NYSE:ROC) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Rockwood Holdings, Inc. (NYSE:ROC). These stocks are Westlake Chemical Corporation (NYSE:WLK), International Flavors & Fragrances Inc (NYSE:IFF), W.R. Grace & Co. (NYSE:GRA), Albemarle Corporation (NYSE:ALB), and The Valspar Corporation (NYSE:VAL). This group of stocks belong to the specialty chemicals industry and their market caps are similar to ROC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Westlake Chemical Corporation (NYSE:WLK) | 29 | 0 | 13 |
| International Flavors & Fragrances Inc (NYSE:IFF) | 18 | 0 | 5 |
| W.R. Grace & Co. (NYSE:GRA) | 46 | 0 | 6 |
| Albemarle Corporation (NYSE:ALB) | 17 | 0 | 2 |
| The Valspar Corporation (NYSE:VAL) | 18 | 1 | 3 |
With the results shown by our strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Rockwood Holdings, Inc. (NYSE:ROC) shareholders fit into this picture quite nicely.
