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Is US Ecology Inc. (ECOL) Going to Burn These Hedge Funds?

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Now, according to many of your fellow readers, hedge funds are viewed as bloated, old financial vehicles of a forgotten age. Although there are In excess of 8,000 hedge funds with their doors open currently, this site looks at the elite of this club, around 525 funds. Analysts calculate that this group controls the lion’s share of all hedge funds’ total capital, and by paying attention to their best picks, we’ve identified a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is a second way to analyze the marketplace. Obviously, there are a number of reasons for an insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this method if investors understand what to do (learn more here).

What’s more, let’s study the recent info surrounding US Ecology Inc. (NASDAQ:ECOL).

What does the smart money think about US Ecology Inc. (NASDAQ:ECOL)?

Heading into Q3, a total of 9 of the hedge funds we track held long positions in this stock, a change of -25% from the previous quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes significantly.

US Ecology Inc. (NASDAQ:ECOL)When using filings from the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in US Ecology Inc. (NASDAQ:ECOL). Renaissance Technologies has a $5.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which held a $1.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.

Judging by the fact that US Ecology Inc. (NASDAQ:ECOL) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few funds who sold off their entire stakes at the end of the second quarter. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management dumped the largest stake of all the hedgies we key on, totaling about $0.3 million in stock, and Ken Gray and Steve Walsh of Bryn Mawr Capital was right behind this move, as the fund dropped about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds at the end of the second quarter.

What do corporate executives and insiders think about US Ecology Inc. (NASDAQ:ECOL)?

Legal insider trading, particularly when it’s bullish, is best served when the company in focus has seen transactions within the past six months. Over the last 180-day time frame, US Ecology Inc. (NASDAQ:ECOL) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to US Ecology Inc. (NASDAQ:ECOL). These stocks are Darling International Inc. (NYSE:DAR), Casella Waste Systems Inc. (NASDAQ:CWST), TRC Companies, Inc. (NYSE:TRR), Heckmann Corporation (NYSE:HEK), and EnergySolutions, Inc. (NYSE:ES). All of these stocks are in the waste management industry and their market caps are closest to ECOL’s market cap.

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