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Wausau Paper Corp. (WPP): Insiders Are Buying, Should You?

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Wausau Paper Corp. (NYSE:WPP) was in 6 hedge funds’ portfolio at the end of the fourth quarter of 2012. WPP has seen a decrease in support from the world’s most elite money managers in recent months. There were 10 hedge funds in our database with WPP holdings at the end of the previous quarter.

Jeff Smith

According to most traders, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are greater than 8000 funds in operation today, we at Insider Monkey hone in on the moguls of this group, about 450 funds. It is widely believed that this group has its hands on the majority of the smart money’s total capital, and by keeping an eye on their best equity investments, we have come up with a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as key, positive insider trading activity is a second way to parse down the marketplace. There are many reasons for an insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the valuable potential of this tactic if “monkeys” know where to look (learn more here).

With all of this in mind, we’re going to take a peek at the key action encompassing Wausau Paper Corp. (NYSE:WPP).

How have hedgies been trading Wausau Paper Corp. (NYSE:WPP)?

At year’s end, a total of 6 of the hedge funds we track held long positions in this stock, a change of -40% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly.

Of the funds we track, Jeffrey Smith’s Starboard Value LP had the biggest position in Wausau Paper Corp. (NYSE:WPP), worth close to $63.2 million, accounting for 7.2% of its total 13F portfolio. Coming in second is Steven Cohen of SAC Capital Advisors, with a $3.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Jay Petschek and Steven Major’s Corsair Capital Management, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.

Because Wausau Paper Corp. (NYSE:WPP) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that decided to sell off their positions entirely in Q4. Interestingly, Israel Englander’s Millennium Management dumped the largest position of all the hedgies we key on, totaling close to $1.4 million in stock., and Joel Greenblatt of Gotham Asset Management was right behind this move, as the fund dropped about $0.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds in Q4.

What have insiders been doing with Wausau Paper Corp. (NYSE:WPP)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, Wausau Paper Corp. (NYSE:WPP) has experienced 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Wausau Paper Corp. (NYSE:WPP). These stocks are Buckeye Technologies Inc. (NYSE:BKI), P.H. Glatfelter Company (NYSE:GLT), Boise Inc. (NYSE:BZ), Mercer International Inc. (NASDAQ:MERC), and Neenah Paper, Inc. (NYSE:NP). All of these stocks are in the paper & paper products industry and their market caps are similar to WPP’s market cap.

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