In the eyes of many investors, hedge funds are assumed to be useless, old financial tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, this site looks at the bigwigs of this club, about 525 funds. Analysts calculate that this group oversees most of the hedge fund industry's total capital, and by keeping an eye on their highest quality picks, we've discovered a few investment strategies that have historically outperformed the 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 started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Equally as necessary, optimistic insider trading activity is another way to look at the marketplace. Obviously, there are a variety of motivations for an executive to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this method if piggybackers know what to do (learn more here).
Thus, we're going to study the newest info surrounding AAON, Inc. (NASDAQ:AAON).
Heading into Q3, a total of 8 of the hedge funds we track held long positions in this stock, a change of -20% from the previous quarter. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly.
Out of the hedge funds we follow, Chuck Royce's Royce & Associates had the largest position in AAON, Inc. (NASDAQ:AAON), worth close to $49.8 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Joel Greenblatt of Gotham Asset Management, with a $1.8 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include D. E. Shaw's D E Shaw, Jim Simons's Renaissance Technologies and Cliff Asness's AQR Capital Management.
As AAON, Inc. (NASDAQ:AAON) has faced dropping sentiment from the smart money's best and brightest, we can see that there exists a select few funds that decided to sell off their positions entirely heading into Q2. It's worth mentioning that Mike Vranos's Ellington said goodbye to the largest position of all the hedgies we track, totaling about $0.4 million in stock, and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund dumped about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds heading into Q2.
Insider buying made by high-level executives is particularly usable when the company we're looking at has experienced transactions within the past six months. Over the latest six-month time period, AAON, Inc. (NASDAQ:AAON) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to AAON, Inc. (NASDAQ:AAON). These stocks are Apogee Enterprises, Inc. (NASDAQ:APOG), Headwaters Inc (NYSE:HW), Universal Forest Products, Inc. (NASDAQ:UFPI), Quanex Building Products Corporation (NYSE:NX), and Griffon Corporation (NYSE:GFF). This group of stocks are in the general building materials industry and their market caps match AAON's market cap.