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Hedge Funds Aren’t Crazy About A. Schulman Inc (SHLM) Anymore

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If you were to ask many of your peers, hedge funds are assumed to be overrated, outdated investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds in operation today, this site aim at the elite of this group, about 525 funds. It is widely held that this group oversees the lion’s share of the hedge fund industry’s total capital, and by monitoring their highest quality picks, we’ve unearthed a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as key, optimistic insider trading sentiment is a second way to look at the stock market universe. Just as you’d expect, there are plenty of motivations for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this method if investors understand what to do (learn more here).

Keeping this in mind, let’s examine the latest info surrounding A. Schulman Inc (NASDAQ:SHLM).

How have hedgies been trading A. Schulman Inc (NASDAQ:SHLM)?

In preparation for the third quarter, a total of 11 of the hedge funds we track were long in this stock, a change of -8% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly.

A. Schulman Inc (NASDAQ:SHLM)According to our 13F database, Royce & Associates, managed by Chuck Royce, holds the biggest position in A. Schulman Inc (NASDAQ:SHLM). Royce & Associates has a $65.6 million position in the stock, comprising 0.2% of its 13F portfolio. On Royce & Associates’s heels is Daruma Asset Management, managed by Mariko Gordon, which held a $43.3 million position; 2.1% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Cliff Asness’s AQR Capital Management, David Dreman’s Dreman Value Management and Joel Greenblatt’s Gotham Asset Management.

Due to the fact A. Schulman Inc (NASDAQ:SHLM) has witnessed a fall in interest from the smart money’s best and brightest, we can see that there were a few money managers that slashed their full holdings at the end of the second quarter. Intriguingly, Jim Simons’s Renaissance Technologies cut the biggest stake of the 450+ funds we key on, comprising an estimated $1.4 million in stock. D. E. Shaw’s fund, D E Shaw, also dropped its stock, about $0.7 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds at the end of the second quarter.

How are insiders trading A. Schulman Inc (NASDAQ:SHLM)?

Bullish insider trading is at its handiest when the company in question has seen transactions within the past 180 days. Over the last 180-day time period, A. Schulman Inc (NASDAQ:SHLM) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to A. Schulman Inc (NASDAQ:SHLM). These stocks are Solazyme Inc (NASDAQ:SZYM), FutureFuel Corp. (NYSE:FF), Rentech, Inc. (NYSEAMEX:RTK), Balchem Corporation (NASDAQ:BCPC), and LSB Industries, Inc. (NYSE:LXU). All of these stocks are in the chemicals – major diversified industry and their market caps are similar to SHLM’s market cap.

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