Foster Wheeler AG (FWLT): Are Hedge Funds Right About This Stock?

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Foster Wheeler AG (NASDAQ:FWLT) was in 24 hedge funds’ portfolio at the end of the first quarter of 2013. FWLT investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 27 hedge funds in our database with FWLT positions at the end of the previous quarter.

Foster Wheeler AG (NASDAQ:FWLT)

If you’d ask most traders, hedge funds are perceived as worthless, outdated financial tools of years past. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the leaders of this club, close to 450 funds. It is widely believed that this group controls the majority of the smart money’s total asset base, and by keeping an eye on their top picks, we have deciphered a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to 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 (see the details here).

Equally as important, bullish insider trading activity is a second way to break down the investments you’re interested in. As the old adage goes: there are a variety of stimuli for an insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the valuable potential of this tactic if investors understand where to look (learn more here).

With all of this in mind, it’s important to take a gander at the recent action surrounding Foster Wheeler AG (NASDAQ:FWLT).

What does the smart money think about Foster Wheeler AG (NASDAQ:FWLT)?

Heading into Q2, a total of 24 of the hedge funds we track were bullish in this stock, a change of -11% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Platinum Asset Management, managed by Kerr Neilson, holds the biggest position in Foster Wheeler AG (NASDAQ:FWLT). Platinum Asset Management has a $223 million position in the stock, comprising 4.8% of its 13F portfolio. On Platinum Asset Management’s heels is Ken Griffin of Citadel Investment Group, with a $98.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Steven Cohen’s SAC Capital Advisors, Robert Pitts’s Steadfast Capital Management and David Dreman’s Dreman Value Management.

Judging by the fact that Foster Wheeler AG (NASDAQ:FWLT) has experienced declining sentiment from the smart money, it’s safe to say that there exists a select few fund managers who sold off their positions entirely heading into Q2. It’s worth mentioning that Dan Loeb’s Third Point dumped the largest position of the “upper crust” of funds we track, worth close to $51.1 million in stock., and Dmitry Balyasny of Balyasny Asset Management was right behind this move, as the fund said goodbye to about $21 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds heading into Q2.

Insider trading activity in Foster Wheeler AG (NASDAQ:FWLT)

Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time period, Foster Wheeler AG (NASDAQ:FWLT) has seen 1 unique insiders buying, and 12 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Foster Wheeler AG (NASDAQ:FWLT). These stocks are Primoris Services Corp (NASDAQ:PRIM), Granite Construction Inc. (NYSE:GVA), Empresas ICA SA (ADR) (NYSE:ICA), McDermott International (NYSE:MDR), and MasTec, Inc. (NYSE:MTZ). This group of stocks are in the heavy construction industry and their market caps are similar to FWLT’s market cap.

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