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This Metric Says You Are Smart to Sell Rockwood Holdings, Inc. (ROC)

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Is Rockwood Holdings, Inc. (NYSE:ROC) a superb stock to buy now? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions decreased by 2 recently.

Rockwood Holdings, Inc. (NYSE:ROC)

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Just as important, optimistic insider trading sentiment is another way to parse down the world of equities. Obviously, there are a variety of motivations for an executive to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this tactic if you know what to do (learn more here).

Now, we’re going to take a look at the latest action encompassing Rockwood Holdings, Inc. (NYSE:ROC).

Hedge fund activity in Rockwood Holdings, Inc. (NYSE:ROC)

At Q1’s end, a total of 34 of the hedge funds we track were long in this stock, a change of -6% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably.

According to our comprehensive database, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the largest position in Rockwood Holdings, Inc. (NYSE:ROC). Iridian Asset Management has a $212.2 million position in the stock, comprising 3.1% of its 13F portfolio. Coming in second is Alexander Roepers of Atlantic Investment Management, with a $169.5 million position; 15.5% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include Jean-Marie Eveillard’s First Eagle Investment Management, Barry Rosenstein’s JANA Partners and Daniel S. Och’s OZ Management.

Due to the fact that Rockwood Holdings, Inc. (NYSE:ROC) has witnessed declining sentiment from hedge fund managers, logic holds that there exists a select few hedgies that decided to sell off their positions entirely in Q1. At the top of the heap, Rob Butts and Josh Clark’s Southpoint Capital Advisors dumped the largest investment of the “upper crust” of funds we watch, totaling about $51.6 million in stock., and Keith Meister of Corvex Capital was right behind this move, as the fund sold off about $27.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds in Q1.

How are insiders trading Rockwood Holdings, Inc. (NYSE:ROC)?

Insider buying is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time period, Rockwood Holdings, Inc. (NYSE:ROC) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Rockwood Holdings, Inc. (NYSE:ROC). These stocks are Westlake Chemical Corporation (NYSE:WLK), International Flavors & Fragrances Inc (NYSE:IFF), W.R. Grace & Co. (NYSE:GRA), Albemarle Corporation (NYSE:ALB), and The Valspar Corporation (NYSE:VAL). This group of stocks belong to the specialty chemicals industry and their market caps are similar to ROC’s market cap.

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