Is Layne Christensen Company (NASDAQ:LAYN) a sound stock to buy now? Money managers are turning bullish. The number of long hedge fund positions improved by 1 recently.
If you’d ask most stock holders, hedge funds are viewed as underperforming, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at the moment, we look at the elite of this group, about 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total asset base, and by tracking their best stock picks, we have spotted a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as integral, positive insider trading activity is another way to parse down the marketplace. Obviously, there are many incentives for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this method if “monkeys” know where to look (learn more here).
Now, let’s take a look at the recent action regarding Layne Christensen Company (NASDAQ:LAYN).
What does the smart money think about Layne Christensen Company (NASDAQ:LAYN)?
At the end of the first quarter, a total of 7 of the hedge funds we track were long in this stock, a change of 17% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly.
Of the funds we track, GAMCO Investors, managed by Mario Gabelli, holds the most valuable position in Layne Christensen Company (NASDAQ:LAYN). GAMCO Investors has a $33.1 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $28.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include Jeffrey Vinik’s Vinik Asset Management, John I. Dickerson’s Summit Global Management and Nelson Obus’s Wynnefield Capital.
As aggregate interest increased, key hedge funds have been driving this bullishness. Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, established the most valuable position in Layne Christensen Company (NASDAQ:LAYN). Bryn Mawr Capital had 0.3 million invested in the company at the end of the quarter.
How have insiders been trading Layne Christensen Company (NASDAQ:LAYN)?
Bullish insider trading is best served when the company in question has experienced transactions within the past half-year. Over the latest half-year time period, Layne Christensen Company (NASDAQ:LAYN) has seen 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Layne Christensen Company (NASDAQ:LAYN). These stocks are Argan, Inc. (NYSEAMEX:AGX), Orion Marine Group, Inc. (NYSE:ORN), Dycom Industries, Inc. (NYSE:DY), Matrix Service Co (NASDAQ:MTRX), and Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). This group of stocks are the members of the heavy construction industry and their market caps resemble LAYN’s market cap.