Is it smart to be bullish on Innospec Inc. (NASDAQ:IOSP)?
In the eyes of many of your fellow readers, hedge funds are seen as overrated, old financial vehicles of a period lost to current times. Although there are over 8,000 hedge funds trading currently, Insider Monkey aim at the elite of this group, about 525 funds. It is widely held that this group oversees the majority of all hedge funds’ total assets, and by tracking their best picks, we’ve deciphered a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year 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 topped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as key, positive insider trading activity is a second way to analyze the world of equities. There are a number of incentives for an insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this method if shareholders understand what to do (learn more here).
Thus, it’s important to discuss the recent info about Innospec Inc. (NASDAQ:IOSP).
What have hedge funds been doing with Innospec Inc. (NASDAQ:IOSP)?
At the end of the second quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly.
Out of the hedge funds we follow, Royce & Associates, managed by Chuck Royce, holds the largest position in Innospec Inc. (NASDAQ:IOSP). Royce & Associates has a $82.9 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $16.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Amy Minella’s Cardinal Capital, Cliff Asness’s AQR Capital Management and Jeffrey Gendell’s Tontine Asset Management.
Since Innospec Inc. (NASDAQ:IOSP) has witnessed bearish sentiment from the smart money’s best and brightest, logic holds that there exists a select few hedge funds that decided to sell off their full holdings in Q1. It’s worth mentioning that Matthew Hulsizer’s PEAK6 Capital Management said goodbye to the biggest investment of all the hedgies we monitor, worth close to $0.2 million in stock, and Peter Algert and Kevin Coldiron of Algert Coldiron Investors was right behind this move, as the fund sold off about $0.2 million worth. These moves 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 Innospec Inc. (NASDAQ:IOSP)?
Legal insider trading, particularly when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest 180-day time frame, Innospec Inc. (NASDAQ:IOSP) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to Innospec Inc. (NASDAQ:IOSP). These stocks are Quaker Chemical Corp (NYSE:KWR), Flotek Industries Inc (NYSE:FTK), WD-40 Company (NASDAQ:WDFC), Innophos Holdings, Inc. (NASDAQ:IPHS), and Koppers Holdings Inc. (NYSE:KOP). This group of stocks belong to the specialty chemicals industry and their market caps resemble IOSP’s market cap.