Editor’s note: The original version of this article stated that York Capital sold off its PetroLogistics stake in Q1. This was incorrect; York Capital did not sell any of its PDH shares last quarter. Insider Monkey apologizes for the error.
Is PetroLogistics LP (NYSE:PDH) the right investment to pursue these days?
If you’d ask most traders, hedge funds are perceived as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open today, we at Insider Monkey choose to focus on the elite of this club, around 450 funds. It is widely believed that this group has its hands on the lion’s share of the smart money’s total capital, and by tracking their top investments, we have determined a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as key, positive insider trading activity is a second way to break down the world of equities. Obviously, there are a number of reasons for an upper level exec to sell shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this method if investors understand where to look (learn more here).
Now, let’s take a glance at the recent action surrounding PetroLogistics LP (NYSE:PDH).
What does the smart money think about PetroLogistics LP (NYSE:PDH)?
Heading into Q2, a total of 11 of the hedge funds we track held long positions in this stock, a change from 10 one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.
Of the funds we track, Gilchrist Berg’s Water Street Capital had the biggest position in PetroLogistics LP (NYSE:PDH), worth close to $25.3 million, accounting for 0.8% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Catapult Capital Management, with a $7.4 million call position; the fund has 1.4% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Paul Marshall and Ian Wace’s Marshall Wace LLP, Jim Simons’s Renaissance Technologies and Robert Joseph Caruso’s Select Equity Group.
How have insiders been trading PetroLogistics LP (NYSE:PDH)?
Bullish insider trading is best served when the company in question has seen transactions within the past six months. Over the last 180-day time period, PetroLogistics LP (NYSE:PDH) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to PetroLogistics LP (NYSE:PDH). These stocks are Braskem SA (ADR) (NYSE:BAK), LSB Industries, Inc. (NYSE:LXU), Huntsman Corporation (NYSE:HUN), A. Schulman Inc (NASDAQ:SHLM), and Balchem Corporation (NASDAQ:BCPC). All of these stocks are in the chemicals – major diversified industry and their market caps are closest to PDH’s market cap.