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Hedge Funds Are Dumping Nordson Corporation (NASDAQ:NDSN)

Nordson Corporation (NASDAQ:NDSN) was in 13 hedge funds’ portfolio at the end of December. NDSN shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. There were 13 hedge funds in our database with NDSN positions at the end of the previous quarter.

Nordson Corporation (NASDAQ:NDSN)

In the eyes of most traders, hedge funds are seen as unimportant, old investment tools of the past. While there are more than 8000 funds with their doors open today, we look at the crème de la crème of this club, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the hedge fund industry’s total capital, and by paying attention to their top stock picks, we have formulated a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 25 percentage points in 6.5 month (check out a sample of our picks).

Equally as beneficial, bullish insider trading activity is another way to parse down the investments you’re interested in. Just as you’d expect, there are plenty of incentives for a bullish insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the impressive potential of this strategy if investors know where to look (learn more here).

Consequently, we’re going to take a glance at the recent action regarding Nordson Corporation (NASDAQ:NDSN).

How are hedge funds trading Nordson Corporation (NASDAQ:NDSN)?

Heading into 2013, a total of 13 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in Nordson Corporation (NASDAQ:NDSN), worth close to $95 million, comprising 0.3% of its total 13F portfolio. On Royce & Associates’s heels is Jim Simons of Renaissance Technologies, with a $19 million position; 0.7% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Donald Chiboucis’s Columbus Circle Investors, Andrew Sandler’s Sandler Capital Management and Jeffrey Vinik’s Vinik Asset Management.

Since Nordson Corporation (NASDAQ:NDSN) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers that elected to cut their positions entirely in Q4. At the top of the heap, Noam Gottesman’s GLG Partners sold off the biggest investment of all the hedgies we watch, comprising an estimated $2 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also dumped its stock, about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Nordson Corporation (NASDAQ:NDSN)?

Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the latest 180-day time frame, Nordson Corporation (NASDAQ:NDSN) has experienced 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Nordson Corporation (NASDAQ:NDSN). These stocks are Avery Dennison Corp (NYSE:AVY), Colfax Corp (NYSE:CFX), IDEX Corporation (NYSE:IEX), Dresser-Rand Group Inc. (NYSE:DRC), and SPX Corporation (NYSE:SPW). All of these stocks are in the diversified machinery industry and their market caps are closest to NDSN’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Avery Dennison Corp (NYSE:AVY) 8 0 8
Colfax Corp (NYSE:CFX) 22 0 0
IDEX Corporation (NYSE:IEX) 10 0 4
Dresser-Rand Group Inc. (NYSE:DRC) 9 1 6
SPX Corporation (NYSE:SPW) 21 0 6

With the returns demonstrated by Insider Monkey’s research, everyday investors must always keep an eye on hedge fund and insider trading activity, and Nordson Corporation (NASDAQ:NDSN) shareholders fit into this picture quite nicely.

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