Is Rockwood Holdings, Inc. (NYSE:ROC) a buy?
To the average investor, there are many gauges investors can use to analyze their holdings. A couple of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the S&P 500 by a very impressive amount (see just how much).
Equally as crucial, bullish insider trading activity is another way to analyze the financial markets. There are many incentives for a bullish insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Various academic studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).
Keeping this in mind, let's examine the latest info for Rockwood Holdings, Inc. (NYSE:ROC).
At the end of the second quarter, a total of 31 of the hedge funds we track were long in this stock, a change of -9% from one quarter earlier. With the smart money's capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably.
Out of the hedge funds we follow, William B. Gray's Orbis Investment Management had the biggest position in Rockwood Holdings, Inc. (NYSE:ROC), worth close to $232.9 million, accounting for 1.9% of its total 13F portfolio. The second largest stake is held by First Eagle Investment Management, managed by Matt McLennan, which held a $210 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other peers that are bullish include David Cohen and Harold Levy's Iridian Asset Management, Daniel S. Och's OZ Management and Alexander Roepers's Atlantic Investment Management.
Due to the fact Rockwood Holdings, Inc. (NYSE:ROC) has experienced declining interest from upper-tier hedge fund managers, logic holds that there were a few money managers that slashed their positions entirely at the end of the second quarter. Intriguingly, Barry Rosenstein's JANA Partners dropped the biggest stake of the "upper crust" of funds we track, valued at about $163.8 million in stock, and Anand Parekh of Alyeska Investment Group was right behind this move, as the fund sold off about $22.9 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds at the end of the second quarter.
Legal insider trading, particularly when it's bullish, is best served when the company we're looking at has experienced transactions within the past 180 days. Over the last 180-day time period, Rockwood Holdings, Inc. (NYSE:ROC) has seen zero unique insiders purchasing, and 2 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 Rockwood Holdings, Inc. (NYSE:ROC). These stocks are Westlake Chemical Corporation (NYSE:WLK), International Flavors & Fragrances Inc (NYSE:IFF), W.R. Grace & Co. (NYSE:GRA), Albemarle Corporation (NYSE:ALB), and The Valspar Corporation (NYSE:VAL). All of these stocks are in the specialty chemicals industry and their market caps resemble ROC's market cap.