Hedge Funds Are Buying Westmoreland Coal Company (WLB)

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Westmoreland Coal Company (NASDAQ:WLB) was in 5 hedge funds’ portfolio at the end of the first quarter of 2013. WLB has seen an increase in enthusiasm from smart money recently. There were 4 hedge funds in our database with WLB positions at the end of the previous quarter.

According to most stock holders, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are over 8000 funds trading at the moment, we look at the masters of this group, about 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by paying attention to their best equity investments, we have determined a number of investment strategies that have historically outstripped the market. 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 started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, bullish insider trading sentiment is a second way to break down the financial markets. Just as you’d expect, there are a number of reasons for an executive to cut shares of his or her company, but only one, very clear reason why they would buy. Various academic studies have demonstrated the impressive potential of this tactic if shareholders understand where to look (learn more here).

Keeping this in mind, it’s important to take a gander at the latest action encompassing Westmoreland Coal Company (NASDAQ:WLB).

How are hedge funds trading Westmoreland Coal Company (NASDAQ:WLB)?

At the end of the first quarter, a total of 5 of the hedge funds we track were long in this stock, a change of 25% from the previous quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully.

Westmoreland Coal Company (WLB)Of the funds we track, Jeffrey Gendell’s Tontine Asset Management had the largest position in Westmoreland Coal Company (NASDAQ:WLB), worth close to $24.1 million, accounting for 4.2% of its total 13F portfolio. Coming in second is Wynnefield Capital, managed by Nelson Obus, which held a $4.4 million position; 1.5% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include Jay Petschek and Steven Major’s Corsair Capital Management, Jim Simons’s Renaissance Technologies and Matthew Hulsizer’s PEAK6 Capital Management.

As industrywide interest jumped, key money managers were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, initiated the most outsized call position in Westmoreland Coal Company (NASDAQ:WLB). PEAK6 Capital Management had 0.1 million invested in the company at the end of the quarter.

What do corporate executives and insiders think about Westmoreland Coal Company (NASDAQ:WLB)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest 180-day time period, Westmoreland Coal Company (NASDAQ:WLB) has experienced 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Westmoreland Coal Company (NASDAQ:WLB). These stocks are Mountain Province Diamonds, Inc. (NYSEAMEX:MDM), L&L Energy, Inc. (NASDAQ:LLEN), Rhino Resource Partners, L.P. (NYSE:RNO), Alexco Resource Corp. (USA) (NYSEAMEX:AXU), and Hallador Energy Co (NASDAQ:HNRG). This group of stocks are the members of the nonmetallic mineral mining industry and their market caps are closest to WLB’s market cap.

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