Is Boise Inc. (NYSE:BZ) the right investment to pursue these days? Prominent investors are getting less optimistic. The number of bullish hedge fund positions fell by 3 lately.
To most investors, hedge funds are perceived as underperforming, old investment tools of yesteryear. While there are over 8000 funds trading at present, we at Insider Monkey look at the moguls of this group, about 450 funds. It is estimated that this group oversees the lion's share of the hedge fund industry's total capital, and by tracking their top investments, we have uncovered a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 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 break down the financial markets. There are a variety of stimuli for an executive to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this tactic if shareholders know what to do (learn more here).
Consequently, it's important to take a peek at the key action surrounding Boise Inc. (NYSE:BZ).
Heading into Q2, a total of 17 of the hedge funds we track were long in this stock, a change of -15% from the first quarter. With hedgies' capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably.
When looking at the hedgies we track, Paulson & Co, managed by John Paulson, holds the biggest position in Boise Inc. (NYSE:BZ). Paulson & Co has a $60.8 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Passport Capital, managed by John Burbank, which held a $18.6 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other peers that hold long positions include Cliff Asness's AQR Capital Management, Jim Simons's Renaissance Technologies and Israel Englander's Millennium Management.
Judging by the fact that Boise Inc. (NYSE:BZ) has faced falling interest from hedge fund managers, we can see that there is a sect of hedge funds who were dropping their full holdings in Q1. It's worth mentioning that Chuck Royce's Royce & Associates cut the largest position of the "upper crust" of funds we key on, worth about $7 million in stock., and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund said goodbye to about $0.8 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds in Q1.
Bullish insider trading is most useful when the company in focus has seen transactions within the past 180 days. Over the last half-year time period, Boise Inc. (NYSE:BZ) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's check out hedge fund and insider activity in other stocks similar to Boise Inc. (NYSE:BZ). These stocks are KapStone Paper and Packaging Corp. (NYSE:KS), Schweitzer-Mauduit International, Inc. (NYSE:SWM), Clearwater Paper Corp (NYSE:CLW), Buckeye Technologies Inc. (NYSE:BKI), and P.H. Glatfelter Company (NYSE:GLT). This group of stocks are in the paper & paper products industry and their market caps match BZ's market cap.