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This Metric Says You Are Smart to Buy EnergySolutions, Inc. (ES): Ecology and Environment (EEI), Heckmann Corporation (HEK)

EnergySolutions, Inc. (NYSE:ES) was in 12 hedge funds’ portfolio at the end of the fourth quarter of 2012. ES has experienced an increase in support from the world’s most elite money managers lately. There were 10 hedge funds in our database with ES positions at the end of the previous quarter.

EnergySolutions, Inc. (NYSE:ES)To most market participants, hedge funds are assumed to be worthless, outdated financial vehicles of yesteryear. While there are more than 8000 funds trading at present, we hone in on the masters of this club, around 450 funds. It is widely believed that this group controls the majority of the smart money’s total capital, and by paying attention to their best equity investments, we have spotted a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as key, optimistic insider trading activity is another way to parse down the stock market universe. Obviously, there are many reasons for a corporate insider to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, we’re going to take a peek at the recent action encompassing EnergySolutions, Inc. (NYSE:ES).

What have hedge funds been doing with EnergySolutions, Inc. (NYSE:ES)?

In preparation for this year, a total of 12 of the hedge funds we track were long in this stock, a change of 20% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly.

Of the funds we track, Carlson Capital, managed by Clint Carlson, holds the biggest position in EnergySolutions, Inc. (NYSE:ES). Carlson Capital has a $10 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Carl Goldsmith and Scott Klein of Beach Point Capital Management, with a $4 million position; the fund has 3.4% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.

As one would reasonably expect, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most outsized position in EnergySolutions, Inc. (NYSE:ES). Millennium Management had 2 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $1 million investment in the stock during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management, Cliff Asness’s AQR Capital Management, and Thomas Bailard’s Bailard Inc.

How are insiders trading EnergySolutions, Inc. (NYSE:ES)?

Insider purchases made by high-level executives is best served when the company in focus has experienced transactions within the past six months. Over the latest six-month time frame, EnergySolutions, Inc. (NYSE:ES) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to EnergySolutions, Inc. (NYSE:ES). These stocks are Ecology and Environment (NASDAQ:EEI), Heckmann Corporation (NYSE:HEK), Casella Waste Systems Inc. (NASDAQ:CWST), TRC Companies, Inc. (NYSE:TRR), and US Ecology Inc. (NASDAQ:ECOL). This group of stocks belong to the waste management industry and their market caps resemble ES’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Ecology and Environment (NASDAQ:EEI) 1 4 1
Heckmann Corporation (NYSE:HEK) 9 0 0
Casella Waste Systems Inc. (NASDAQ:CWST) 13 1 0
TRC Companies, Inc. (NYSE:TRR) 2 1 0
US Ecology Inc. (NASDAQ:ECOL) 7 0 6

With the returns exhibited by Insider Monkey’s time-tested strategies, retail investors should always watch hedge fund and insider trading activity, and EnergySolutions, Inc. (NYSE:ES) is an important part of this process.

Click here to learn why you should track hedge funds

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