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Hedge Funds Aren’t Crazy About Heckmann Corporation (HEK) Anymore

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Heckmann Corporation (NYSE:HEK) shareholders have witnessed a decrease in support from the world’s most elite money managers lately.

To most investors, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, we look at the moguls of this group, about 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total capital, and by watching their highest performing equity investments, we have determined a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed 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 23.3 percentage points in 8 months (see the details here).

Heckmann Corporation (NYSE:HEK)

Equally as integral, optimistic insider trading sentiment is another way to break down the investments you’re interested in. Just as you’d expect, there are lots of stimuli for an insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Many empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

With all of this in mind, it’s important to take a glance at the latest action surrounding Heckmann Corporation (NYSE:HEK).

What does the smart money think about Heckmann Corporation (NYSE:HEK)?

Heading into Q2, a total of 11 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Wynnefield Capital, managed by Nelson Obus, holds the largest position in Heckmann Corporation (NYSE:HEK). Wynnefield Capital has a $12.7 million position in the stock, comprising 4.3% of its 13F portfolio. The second largest stake is held by Leighton Welch of Welch Capital Partners, with a $4.9 million position; 1.8% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Peter S. Park’s Park West Asset Management, Gilchrist Berg’s Water Street Capital and Chuck Royce’s Royce & Associates.

Since Heckmann Corporation (NYSE:HEK) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that decided to sell off their entire stakes heading into Q2. At the top of the heap, Jeffrey Gates’s Gates Capital Management said goodbye to the biggest position of the 450+ funds we watch, worth about $8.6 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund sold off about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Heckmann Corporation (NYSE:HEK)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time frame, Heckmann Corporation (NYSE:HEK) has experienced zero unique insiders purchasing, 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 Heckmann Corporation (NYSE:HEK). These stocks are Clean Harbors Inc (NYSE:CLH), US Ecology Inc. (NASDAQ:ECOL), Covanta Holding Corporation (NYSE:CVA), Progressive Waste Solutions Ltd (USA) (NYSE:BIN), and Darling International Inc. (NYSE:DAR). This group of stocks are the members of the waste management industry and their market caps resemble HEK’s market cap.

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