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Do Hedge Funds and Insiders Love Eagle Materials, Inc. (NYSE:EXP)?

Eagle Materials, Inc. (NYSE:EXP) has experienced a decrease in enthusiasm from smart money recently.

Eagle Materials, Inc.

If you’d ask most market participants, hedge funds are seen as unimportant, old financial vehicles of years past. While there are over 8000 funds with their doors open today, we look at the crème de la crème of this group, about 450 funds. It is widely believed that this group controls most of all hedge funds’ total capital, and by tracking their best stock picks, we have figured out a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Just as beneficial, bullish insider trading activity is another way to break down the stock market universe. There are a number of reasons for a corporate insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this method if “monkeys” understand where to look (learn more here).

Keeping this in mind, it’s important to take a gander at the recent action encompassing Eagle Materials, Inc. (NYSE:EXP).

How have hedgies been trading Eagle Materials, Inc. (NYSE:EXP)?

Heading into 2013, a total of 25 of the hedge funds we track held long positions in this stock, a change of -11% from the third quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, Donald Chiboucis’s Columbus Circle Investors had the largest position in Eagle Materials, Inc. (NYSE:EXP), worth close to $83 million, comprising 0.7% of its total 13F portfolio. On Columbus Circle Investors’s heels is Millennium Management, managed by Israel Englander, which held a $44 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers that hold long positions include SAC Subsidiary’s Sigma Capital Management, Sean Cullinan’s Point State Capital and Malcolm Fairbairn’s Ascend Capital.

Due to the fact that Eagle Materials, Inc. (NYSE:EXP) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their positions entirely in Q4. At the top of the heap, Jim Simons’s Renaissance Technologies dumped the largest position of all the hedgies we watch, worth about $17 million in stock.. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $5 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds in Q4.

How have insiders been trading Eagle Materials, Inc. (NYSE:EXP)?

Insider buying is best served when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time period, Eagle Materials, Inc. (NYSE:EXP) has seen 1 unique insiders purchasing, and 13 insider sales (see the details of insider trades here).

With the results shown by our time-tested strategies, everyday investors must always monitor hedge fund and insider trading activity, and Eagle Materials, Inc. (NYSE:EXP) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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