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Olympic Steel, Inc. (ZEUS): Are Hedge Funds Right About This Stock?

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Olympic Steel, Inc. (NASDAQ:ZEUS) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently.

According to most market participants, hedge funds are perceived as slow, outdated investment tools of yesteryear. While there are more than 8000 funds trading at the moment, we at Insider Monkey look at the bigwigs of this club, around 450 funds. It is widely believed that this group controls the majority of the smart money’s total asset base, and by monitoring their best picks, we have found a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat 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 topped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as key, positive insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are lots of reasons for an insider to downsize shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).

Keeping this in mind, it’s important to take a gander at the latest action encompassing Olympic Steel, Inc. (NASDAQ:ZEUS).

What have hedge funds been doing with Olympic Steel, Inc. (NASDAQ:ZEUS)?

Heading into 2013, a total of 5 of the hedge funds we track were bullish in this stock, a change of -17% from the third quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.

Olympic Steel, Inc. (NASDAQ:ZEUS)According to our comprehensive database, Chuck Royce’s Royce & Associates had the most valuable position in Olympic Steel, Inc. (NASDAQ:ZEUS), worth close to $31.4 million, accounting for 0.1% of its total 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which held a $0.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, David Cohen and Harold Levy’s Iridian Asset Management and Charles Davidson’s Wexford Capital.

Due to the fact that Olympic Steel, Inc. (NASDAQ:ZEUS) has faced a declination in interest from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers that elected to cut their full holdings in Q4. Interestingly, Andy Redleaf’s Whitebox Advisors said goodbye to the largest investment of the “upper crust” of funds we key on, worth close to $0.7 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund dropped about $0.2 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds in Q4.

How are insiders trading Olympic Steel, Inc. (NASDAQ:ZEUS)?

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time period, Olympic Steel, Inc. (NASDAQ:ZEUS) has seen 3 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 Olympic Steel, Inc. (NASDAQ:ZEUS). These stocks are Park-Ohio Holdings Corp. (NASDAQ:PKOH), Gulf Island Fabrication, Inc. (NASDAQ:GIFI), Dynamic Materials Corporation (NASDAQ:BOOM), Tower International Inc (NYSE:TOWR), and Graham Corporation (NYSEAMEX:GHM). This group of stocks are in the metal fabrication industry and their market caps match ZEUS’s market cap.

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