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Should You Avoid Ashland Inc. (NYSE:ASH)?

Ashland Inc. (NYSE:ASH) has experienced a decrease in hedge fund interest recently.

Ashland Inc. NYSE:ASH

At the moment, there are a multitude of indicators investors can use to analyze stocks. A couple of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top fund managers can trounce the S&P 500 by a superb amount (see just how much).

Just as beneficial, bullish insider trading activity is a second way to break down the investments you’re interested in. There are plenty of motivations for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if you know where to look (learn more here).

Keeping this in mind, let’s take a glance at the recent action surrounding Ashland Inc. (NYSE:ASH).

How are hedge funds trading Ashland Inc. (NYSE:ASH)?

Heading into 2013, a total of 28 of the hedge funds we track were long in this stock, a change of -3% from the third quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Alexander Roepers’s Atlantic Investment Management had the most valuable position in Ashland Inc. (NYSE:ASH), worth close to $193 million, accounting for 15.8% of its total 13F portfolio. Sitting at the No. 2 spot is Ralph V. Whitworth of Relational Investors, with a $140 million position; 0.7% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Jeffrey Gates’s Gates Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’s Renaissance Technologies.

Because Ashland Inc. (NYSE:ASH) has experienced bearish sentiment from the smart money, logic holds that there were a few fund managers that elected to cut their full holdings heading into 2013. It’s worth mentioning that Charles Davidson’s Wexford Capital said goodbye to the largest stake of the “upper crust” of funds we monitor, totaling about $3 million in stock., and Jeffrey Vinik of Vinik Asset Management was right behind this move, as the fund said goodbye to about $2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds heading into 2013.

How are insiders trading Ashland Inc. (NYSE:ASH)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, Ashland Inc. (NYSE:ASH) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

With the results demonstrated by Insider Monkey’s tactics, everyday investors must always monitor hedge fund and insider trading activity, and Ashland Inc. (NYSE:ASH) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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