Is James River Coal Company (NASDAQ:JRCC) a first-rate investment now? Prominent investors are buying. The number of bullish hedge fund bets inched up by 5 lately.
According to most market participants, hedge funds are assumed to be slow, outdated financial tools of years past. While there are over 8000 funds with their doors open today, we hone in on the upper echelon of this club, about 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry's total asset base, and by monitoring their highest performing investments, we have determined a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as important, positive insider trading sentiment is a second way to break down the world of equities. Obviously, there are a variety of motivations for an insider to cut shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this strategy if piggybackers know where to look (learn more here).
With these "truths" under our belt, it's important to take a gander at the key action surrounding James River Coal Company (NASDAQ:JRCC).
At the end of the fourth quarter, a total of 10 of the hedge funds we track were bullish in this stock, a change of 100% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably.
According to our comprehensive database, Ascend Capital, managed by Malcolm Fairbairn, holds the largest position in James River Coal Company (NASDAQ:JRCC). Ascend Capital has a $1.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Ascend Capital's heels is Millennium Management, managed by Israel Englander, which held a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Cliff Asness's AQR Capital Management, Randall Smith's Alden Global Capital and Ken Griffin's Citadel Investment Group.
As aggregate interest increased, some big names have jumped into James River Coal Company (NASDAQ:JRCC) headfirst. Millennium Management, managed by Israel Englander, created the most outsized position in James River Coal Company (NASDAQ:JRCC). Millennium Management had 0.9 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also initiated a $0.8 million position during the quarter. The following funds were also among the new JRCC investors: Randall Smith's Alden Global Capital, D. E. Shaw's D E Shaw, and Gregory Fraser, Rudolph Kluiber, and Timothy Kroch's GRT Capital Partners.
Insider purchases made by high-level executives is best served when the company in focus has seen transactions within the past 180 days. Over the last six-month time period, James River Coal Company (NASDAQ:JRCC) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's also review hedge fund and insider activity in other stocks similar to James River Coal Company (NASDAQ:JRCC). These stocks are Revett Minerals Inc ADR (NYSEAMEX:RVM) and Uranium Resources, Inc. (NASDAQ:URRE). This group of stocks are the members of the industrial metals & minerals industry and their market caps resemble JRCC's market cap.