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Is Black Diamond Inc (BDE) Going to Burn These Hedge Funds?

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Black Diamond Inc (NASDAQ:BDE) was in 7 hedge funds’ portfolio at the end of the first quarter of 2013. BDE has seen an increase in enthusiasm from smart money lately. There were 6 hedge funds in our database with BDE holdings at the end of the previous quarter.

In the eyes of most investors, hedge funds are perceived as unimportant, old financial tools of the past. While there are over 8000 funds trading today, we at Insider Monkey look at the elite of this group, around 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by keeping an eye on their highest performing investments, we have found a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Millennium Management, Catapult Capital Management

Equally as key, optimistic insider trading activity is a second way to parse down the marketplace. Just as you’d expect, there are a variety of motivations for an upper level exec to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this strategy if shareholders know where to look (learn more here).

Now, we’re going to take a look at the latest action regarding Black Diamond Inc (NASDAQ:BDE).

Hedge fund activity in Black Diamond Inc (NASDAQ:BDE)

Heading into Q2, a total of 7 of the hedge funds we track held long positions in this stock, a change of 17% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, OZ Management, managed by Daniel S. Och, holds the largest position in Black Diamond Inc (NASDAQ:BDE). OZ Management has a $11.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Park West Asset Management, managed by Peter S. Park, which held a $11.2 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other peers that are bullish include Richard S. Meisenberg’s ACK Asset Management, Chuck Royce’s Royce & Associates and Charles Davidson’s Wexford Capital.

Now, key money managers have jumped into Black Diamond Inc (NASDAQ:BDE) headfirst. Royce & Associates, managed by Chuck Royce, assembled the biggest position in Black Diamond Inc (NASDAQ:BDE). Royce & Associates had 2.6 million invested in the company at the end of the quarter. Amy Minella’s Cardinal Capital also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Israel Englander’s Millennium Management.

How are insiders trading Black Diamond Inc (NASDAQ:BDE)?

Bullish insider trading is best served when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time period, Black Diamond Inc (NASDAQ:BDE) has seen 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 Black Diamond Inc (NASDAQ:BDE). These stocks are Pool Corporation (NASDAQ:POOL), Escalade, Inc. (NASDAQ:ESCA), Callaway Golf Co (NYSE:ELY), Nautilus, Inc. (NYSE:NLS), and Johnson Outdoors Inc. (NASDAQ:JOUT). This group of stocks are the members of the sporting goods industry and their market caps are closest to BDE’s market cap.

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