This Metric Says You Are Smart to Buy Tennant Company (TNC): CECO Environmental Corp. (CECE), ADA-ES, Inc. (ADES)

Tennant Company (NYSE:TNC) has experienced an increase in activity from the world’s largest hedge funds lately.

Tennant Company (NYSE:TNC)In today’s marketplace, there are dozens of metrics market participants can use to monitor stocks. Two of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best investment managers can beat their index-focused peers by a significant amount (see just how much).

Equally as important, positive insider trading activity is another way to parse down the financial markets. As the old adage goes: there are a variety of reasons for an upper level exec to downsize shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this strategy if investors understand where to look (learn more here).

Keeping this in mind, it’s important to take a glance at the key action regarding Tennant Company (NYSE:TNC).

Hedge fund activity in Tennant Company (NYSE:TNC)

Heading into 2013, a total of 11 of the hedge funds we track were long in this stock, a change of 22% from the third quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in Tennant Company (NYSE:TNC), worth close to $74 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which held a $21 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Drew Cupps’s Cupps Capital Management, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

As one would reasonably expect, some big names were breaking ground themselves. Gotham Asset Management, managed by Joel Greenblatt, established the most outsized position in Tennant Company (NYSE:TNC). Gotham Asset Management had 1 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $0 million position during the quarter.

What do corporate executives and insiders think about Tennant Company (NYSE:TNC)?

Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past six months. Over the latest six-month time period, Tennant Company (NYSE:TNC) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Tennant Company (NYSE:TNC). These stocks are CECO Environmental Corp. (NASDAQ:CECE), ADA-ES, Inc. (NASDAQ:ADES), Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), CLARCOR Inc. (NYSE:CLC), and Calgon Carbon Corporation (NYSE:CCC). All of these stocks are in the pollution & treatment controls industry and their market caps are closest to TNC’s market cap.

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

With the returns demonstrated by our tactics, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Tennant Company (NYSE:TNC) is an important part of this process.

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

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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