Hedge Funds Are Betting On Alcoa Inc (NYSE:AA)

Alcoa Inc (NYSE:AA) has experienced an increase in enthusiasm from smart money of late.

In the financial world, there are a multitude of gauges shareholders can use to track Mr. Market. Some of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top investment managers can outclass the S&P 500 by a significant margin (see just how much).

AlcoaJust as beneficial, bullish insider trading activity is another way to parse down the world of equities. Just as you’d expect, there are plenty of motivations for a corporate insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here).

With all of this in mind, we’re going to take a glance at the latest action surrounding Alcoa Inc (NYSE:AA).

What have hedge funds been doing with Alcoa Inc (NYSE:AA)?

In preparation for this year, a total of 20 of the hedge funds we track were long in this stock, a change of 5% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully.

According to our comprehensive database, Elm Ridge Capital, managed by Ron Gutfleish, holds the largest position in Alcoa Inc (NYSE:AA). Elm Ridge Capital has a $32 million position in the stock, comprising 3.6% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which held a $22 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Mario Gabelli’s GAMCO Investors, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.

As industrywide interest jumped, specific money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, initiated the biggest position in Alcoa Inc (NYSE:AA). Renaissance Technologies had 18 million invested in the company at the end of the quarter. Larry Foley and Paul Farrell’s Bronson Point Partners also initiated a $12 million position during the quarter. The following funds were also among the new AA investors: Glenn Russell Dubin’s Highbridge Capital Management, Ken Gray and Steve Walsh’s Bryn Mawr Capital, and Mike Vranos’s Ellington.

How have insiders been trading Alcoa Inc (NYSE:AA)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, Alcoa Inc (NYSE:AA) has experienced 2 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s strategies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Alcoa Inc (NYSE:AA) shareholders fit into this picture quite nicely.

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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