This Metric Says You Are Smart to Sell Aegion Corp – Class A (AEGN)

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Aegion Corp – Class A (NASDAQ:AEGN) shareholders have witnessed a decrease in hedge fund sentiment of late.

If you’d ask most traders, hedge funds are viewed as underperforming, outdated financial tools of the past. While there are more than 8000 funds trading today, we at Insider Monkey look at the bigwigs of this club, about 450 funds. Most estimates calculate that this group controls most of all hedge funds’ total asset base, and by monitoring their best investments, we have identified a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as integral, optimistic insider trading activity is another way to parse down the world of equities. Just as you’d expect, there are a variety of stimuli for a bullish insider to cut shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the impressive potential of this strategy if investors understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a peek at the latest action encompassing Aegion Corp – Class A (NASDAQ:AEGN).

How have hedgies been trading Aegion Corp – Class A (NASDAQ:AEGN)?

At the end of the first quarter, a total of 11 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly.

Aegion Corp - Class A (NASDAQ:AEGN)According to our comprehensive database, Peconic Partners LLC, managed by William Harnisch, holds the most valuable position in Aegion Corp – Class A (NASDAQ:AEGN). Peconic Partners LLC has a $33.6 million position in the stock, comprising 5.2% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which held a $16.9 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include John I. Dickerson’s Summit Global Management, Amy Minella’s Cardinal Capital and Mario Gabelli’s GAMCO Investors.

Because Aegion Corp – Class A (NASDAQ:AEGN) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers that slashed their full holdings heading into Q2. Interestingly, D. E. Shaw’s D E Shaw cut the largest position of the “upper crust” of funds we track, comprising close to $0.7 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund dumped about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Aegion Corp – Class A (NASDAQ:AEGN)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has experienced transactions within the past six months. Over the last six-month time frame, Aegion Corp – Class A (NASDAQ:AEGN) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Aegion Corp – Class A (NASDAQ:AEGN). These stocks are Layne Christensen Company (NASDAQ:LAYN), Dycom Industries, Inc. (NYSE:DY), Granite Construction Inc. (NYSE:GVA), Primoris Services Corp (NASDAQ:PRIM), and Tutor Perini Corp (NYSE:TPC). This group of stocks are the members of the heavy construction industry and their market caps are similar to AEGN’s market cap.

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