LSB Industries, Inc. (NYSE:LXU) has seen a decrease in hedge fund sentiment lately.
In the financial world, there are a multitude of metrics market participants can use to watch their holdings. A duo of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best investment managers can trounce the S&P 500 by a very impressive margin (see just how much).
Just as beneficial, positive insider trading sentiment is another way to break down the investments you're interested in. As the old adage goes: there are plenty of reasons for an executive to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this method if investors know where to look (learn more here).
Now, we're going to take a peek at the latest action surrounding LSB Industries, Inc. (NYSE:LXU).
In preparation for this year, a total of 13 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money's capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly.
When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in LSB Industries, Inc. (NYSE:LXU). Royce & Associates has a $51 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Martin Whitman of Third Avenue Management, with a $31 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw and Joel Greenblatt's Gotham Asset Management.
Due to the fact that LSB Industries, Inc. (NYSE:LXU) has experienced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedgies that slashed their entire stakes in Q4. At the top of the heap, Mike Vranos's Ellington dumped the largest position of the 450+ funds we key on, valued at an estimated $1 million in stock.. Steven Cohen's fund, SAC Capital Advisors, also dumped its stock, about $0 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying is at its handiest when the company in focus has seen transactions within the past half-year. Over the last half-year time period, LSB Industries, Inc. (NYSE:LXU) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to LSB Industries, Inc. (NYSE:LXU). These stocks are Balchem Corporation (NASDAQ:BCPC), Solazyme Inc (NASDAQ:SZYM), FutureFuel Corp. (NYSE:FF), Rentech, Inc. (NYSEAMEX:RTK), and A. Schulman Inc (NASDAQ:SHLM). This group of stocks belong to the chemicals - major diversified industry and their market caps are similar to LXU's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Balchem Corporation (NASDAQ:BCPC)||7||1||2|
|Solazyme Inc (NASDAQ:SZYM)||10||2||6|
|FutureFuel Corp. (NYSE:FF)||11||2||0|
|Rentech, Inc. (NYSEAMEX:RTK)||17||0||4|
|A. Schulman Inc (NASDAQ:SHLM)||11||1||3|
With the returns exhibited by the aforementioned research, everyday investors should always watch hedge fund and insider trading activity, and LSB Industries, Inc. (NYSE:LXU) is an important part of this process.
Insider Monkey's small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.