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Should You Avoid Donaldson Company, Inc. (DCI)?: ADA-ES, Inc. (ADES), Heritage-Crystal Clean, Inc. (HCCI)

Donaldson Company, Inc. (NYSE:DCI) was in 13 hedge funds’ portfolio at the end of the fourth quarter of 2012. DCI has experienced a decrease in activity from the world’s largest hedge funds in recent months. There were 15 hedge funds in our database with DCI positions at the end of the previous quarter.

Donaldson Company, Inc. (NYSE:DCI)

To the average investor, there are dozens of gauges investors can use to analyze publicly traded companies. A duo of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can outclass their index-focused peers by a superb amount (see just how much).

Equally as important, bullish insider trading activity is a second way to break down the world of equities. There are a variety of motivations for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this tactic if you understand what to do (learn more here).

With these “truths” under our belt, let’s take a peek at the latest action encompassing Donaldson Company, Inc. (NYSE:DCI).

Hedge fund activity in Donaldson Company, Inc. (NYSE:DCI)

At year’s end, a total of 13 of the hedge funds we track held long positions in this stock, a change of -13% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially.

According to our comprehensive database, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Donaldson Company, Inc. (NYSE:DCI). GAMCO Investors has a $72 million position in the stock, comprising 0.5% of its 13F portfolio. On GAMCO Investors’s heels is Chuck Royce of Royce & Associates, with a $38 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.

Seeing as Donaldson Company, Inc. (NYSE:DCI) has faced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers that slashed their positions entirely at the end of the year. Interestingly, Mike Vranos’s Ellington sold off the largest investment of the “upper crust” of funds we monitor, valued at close to $1 million in stock.. Paul Tudor Jones’s fund, Tudor Investment Corp, also cut its stock, about $0 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds at the end of the year.

How are insiders trading Donaldson Company, Inc. (NYSE:DCI)?

Insider trading activity, especially 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, Donaldson Company, Inc. (NYSE:DCI) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Donaldson Company, Inc. (NYSE:DCI). These stocks are ADA-ES, Inc. (NASDAQ:ADES), Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), Tennant Company (NYSE:TNC), Calgon Carbon Corporation (NYSE:CCC), and CLARCOR Inc. (NYSE:CLC). This group of stocks are the members of the pollution & treatment controls industry and their market caps are closest to DCI’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
ADA-ES, Inc. (NASDAQ:ADES) 3 0 3
Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) 2 0 5
Tennant Company (NYSE:TNC) 11 0 4
Calgon Carbon Corporation (NYSE:CCC) 3 2 3
CLARCOR Inc. (NYSE:CLC) 10 0 2

With the returns shown by the aforementioned strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Donaldson Company, Inc. (NYSE:DCI) applies perfectly to this mantra.

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

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