Is Insteel Industries Inc (NASDAQ:IIIN) the right pick for your portfolio? Money managers are becoming hopeful. The number of long hedge fund positions inched up by 4 in recent months.
To most traders, hedge funds are assumed to be underperforming, outdated financial vehicles of the past. While there are greater than 8000 funds in operation today, we choose to focus on the upper echelon of this group, about 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total capital, and by monitoring their highest performing equity investments, we have come up with a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as important, optimistic insider trading sentiment is another way to parse down the stock market universe. Obviously, there are plenty of motivations for a corporate insider to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this tactic if investors know where to look (learn more here).
Consequently, we’re going to take a look at the recent action encompassing Insteel Industries Inc (NASDAQ:IIIN).
What does the smart money think about Insteel Industries Inc (NASDAQ:IIIN)?
In preparation for this quarter, a total of 9 of the hedge funds we track were bullish in this stock, a change of 80% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially.
According to our comprehensive database, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the most valuable position in Insteel Industries Inc (NASDAQ:IIIN). First Eagle Investment Management has a $14.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which held a $12.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Martin Whitman’s Third Avenue Management, Joel Greenblatt’s Gotham Asset Management and Israel Englander’s Millennium Management.
As aggregate interest increased, key hedge funds have been driving this bullishness. Gotham Asset Management, managed by Joel Greenblatt, initiated the most outsized position in Insteel Industries Inc (NASDAQ:IIIN). Gotham Asset Management had 1.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.1 million position during the quarter. The other funds with brand new IIIN positions are John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.
Insider trading activity in Insteel Industries Inc (NASDAQ:IIIN)
Insider buying is particularly usable when the company in focus has seen transactions within the past half-year. Over the last 180-day time frame, Insteel Industries Inc (NASDAQ:IIIN) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
With the returns shown by our time-tested strategies, everyday investors must always watch hedge fund and insider trading sentiment, and Insteel Industries Inc (NASDAQ:IIIN) applies perfectly to this mantra.