Is Molycorp Inc (NYSE:MCP) a buy right now? Investors who are in the know are becoming more confident. The number of bullish hedge fund bets went up by 4 in recent months.
To most traders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are greater than 8000 funds trading at present, we at Insider Monkey look at the elite of this group, around 450 funds. Most estimates calculate that this group has its hands on most of the smart money's total asset base, and by monitoring their best investments, we have found a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as beneficial, positive insider trading sentiment is a second way to break down the stock market universe. There are a number of motivations for an upper level exec to get rid of shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this method if "monkeys" understand where to look (learn more here).
Now, we're going to take a glance at the latest action surrounding Molycorp Inc (NYSE:MCP).
At Q1's end, a total of 19 of the hedge funds we track were bullish in this stock, a change of 27% from the first quarter. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly.
When looking at the hedgies we track, John Griffin's Blue Ridge Capital had the largest position in Molycorp Inc (NYSE:MCP), worth close to $14.9 million, comprising 0.2% of its total 13F portfolio. On Blue Ridge Capital's heels is Chuck Royce of Royce & Associates, with a $8.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include Philippe Laffont's Coatue Management, Jim Simons's Renaissance Technologies and Glenn Russell Dubin's Highbridge Capital Management.
Now, some big names have been driving this bullishness. Royce & Associates, managed by Chuck Royce, created the largest position in Molycorp Inc (NYSE:MCP). Royce & Associates had 8.1 million invested in the company at the end of the quarter. Philippe Laffont's Coatue Management also made a $5.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons's Renaissance Technologies, Glenn Russell Dubin's Highbridge Capital Management, and Israel Englander's Millennium Management.
Bullish insider trading is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last half-year time period, Molycorp Inc (NYSE:MCP) has seen 5 unique insiders buying, and zero insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned strategies, retail investors should always pay attention to hedge fund and insider trading activity, and Molycorp Inc (NYSE:MCP) applies perfectly to this mantra.