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Should You Avoid LKQ Corporation (NASDAQ:LKQ)? – BorgWarner Inc. (NYSE:BWA), Autoliv Inc. (NYSE:ALV)

LKQ Corporation (NASDAQ:LKQ) has experienced a decrease in hedge fund sentiment recently.

In today’s marketplace, there are dozens of indicators shareholders can use to monitor their holdings. A pair of the most useful 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 hedge fund managers can outpace the S&P 500 by a superb margin (see just how much).

Equally as integral, optimistic insider trading activity is a second way to parse down the stock market universe. Obviously, there are a variety of motivations for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).

Now, let’s take a gander at the recent action regarding LKQ Corporation (NASDAQ:LKQ).

What does the smart money think about LKQ Corporation (NASDAQ:LKQ)?

At the end of the fourth quarter, a total of 14 of the hedge funds we track were bullish in this stock, a change of -13% from the third quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.

Of the funds we track, Chilton Investment Company, managed by Richard Chilton, holds the most valuable position in LKQ Corporation (NASDAQ:LKQ). Chilton Investment Company has a $108 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Cantillon Capital Management, managed by William von Mueffling, which held a $93 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Israel Englander’s Millennium Management, Chuck Royce’s Royce & Associates and Phill Gross and Robert Atchinson’s Adage Capital Management.

Since LKQ Corporation (NASDAQ:LKQ) has experienced falling interest from hedge fund managers, we can see that there exists a select few hedgies that slashed their full holdings in Q4. Interestingly, Patrick McCormack’s Tiger Consumer Management cut the biggest stake of the “upper crust” of funds we key on, comprising an estimated $59 million in stock.. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also dropped its stock, about $3 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds in Q4.

Insider trading activity in LKQ Corporation (NASDAQ:LKQ)

Bullish insider trading is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time frame, LKQ Corporation (NASDAQ:LKQ) has experienced 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to LKQ Corporation (NASDAQ:LKQ). These stocks are Allison Transmission Holdings Inc (NYSE:ALSN), BorgWarner Inc. (NYSE:BWA), Lear Corporation (NYSE:LEA), Autoliv Inc. (NYSE:ALV), and TRW Automotive Holdings Corp. (NYSE:TRW). This group of stocks are the members of the auto parts industry and their market caps are similar to LKQ’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Allison Transmission Holdings Inc (NYSE:ALSN) 7 0 10
BorgWarner Inc. (NYSE:BWA) 16 0 6
Lear Corporation (NYSE:LEA) 37 0 6
Autoliv Inc. (NYSE:ALV) 10 0 10
TRW Automotive Holdings Corp. (NYSE:TRW) 23 0 8

With the returns exhibited by the aforementioned studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and LKQ Corporation (NASDAQ:LKQ) applies perfectly to this mantra.

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