Lufkin Industries, Inc. (NASDAQ:LUFK) was in 9 hedge funds' portfolio at the end of the fourth quarter of 2012. LUFK shareholders have witnessed a decrease in support from the world's most elite money managers of late. There were 16 hedge funds in our database with LUFK positions at the end of the previous quarter.
If you'd ask most shareholders, hedge funds are perceived as unimportant, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the top tier of this group, close to 450 funds. Most estimates calculate that this group has its hands on the lion's share of the smart money's total capital, and by tracking their highest performing investments, we have determined a few investment strategies that have historically beaten the 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 topped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as key, positive insider trading sentiment is another way to break down the stock market universe. As the old adage goes: there are a variety of stimuli for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this strategy if investors understand what to do (learn more here).
With all of this in mind, we're going to take a peek at the recent action encompassing Lufkin Industries, Inc. (NASDAQ:LUFK).
In preparation for this year, a total of 9 of the hedge funds we track held long positions in this stock, a change of -44% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly.
According to our comprehensive database, Mario Gabelli's GAMCO Investors had the most valuable position in Lufkin Industries, Inc. (NASDAQ:LUFK), worth close to $33.8 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $16.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Chuck Royce's Royce & Associates, Ken Griffin's Citadel Investment Group and Steven Cohen's SAC Capital Advisors.
Judging by the fact that Lufkin Industries, Inc. (NASDAQ:LUFK) has witnessed bearish sentiment from hedge fund managers, logic holds that there were a few funds that elected to cut their full holdings heading into 2013. It's worth mentioning that SAC Subsidiary's Sigma Capital Management dropped the largest position of the 450+ funds we monitor, comprising an estimated $3.2 million in stock., and Tim Flannery of Copia Capital was right behind this move, as the fund dropped about $2.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 7 funds heading into 2013.
Insider buying is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last 180-day time period, Lufkin Industries, Inc. (NASDAQ:LUFK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity in other stocks similar to Lufkin Industries, Inc. (NASDAQ:LUFK). These stocks are Forum Energy Technologies Inc (NYSE:FET), Precision Drilling Corp (USA) (NYSE:PDS), Helix Energy Solutions Group Inc. (NYSE:HLX), CARBO Ceramics Inc. (NYSE:CRR), and Energy XXI (Bermuda) Limited (NASDAQ:EXXI). All of these stocks are in the oil & gas equipment & services industry and their market caps are closest to LUFK's market cap.