Hedge Funds Are Dumping Mesabi Trust (MSB)

Mesabi Trust (NYSE:MSB) has seen a decrease in enthusiasm from smart money in recent months.

According to most market participants, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, we hone in on the top tier of this group, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total asset base, and by monitoring their best stock picks, we have determined a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as integral, positive insider trading activity is a second way to break down the financial markets. There are a number of motivations for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this tactic if you know where to look (learn more here).

Consequently, we’re going to take a gander at the recent action regarding Mesabi Trust (NYSE:MSB).

How are hedge funds trading Mesabi Trust (NYSE:MSB)?

At Q1’s end, a total of 4 of the hedge funds we track held long positions in this stock, a change of -43% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably.

Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Mesabi Trust (NYSE:MSB). Renaissance Technologies has a $2.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Joel Greenblatt of Gotham Asset Management, with a $2.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Mesabi Trust (NYSE:MSB) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of funds that elected to cut their positions entirely last quarter. Intriguingly, D. E. Shaw’s D E Shaw dumped the biggest position of the “upper crust” of funds we monitor, comprising close to $0.4 million in stock.. Israel Englander’s fund, Millennium Management, also dropped its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds last quarter.

What do corporate executives and insiders think about Mesabi Trust (NYSE:MSB)?

Insider purchases made by high-level executives is best served when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time period, Mesabi Trust (NYSE:MSB) has seen zero 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 Mesabi Trust (NYSE:MSB). These stocks are Gladstone Investment Corporation (NASDAQ:GAIN), North European Oil Royalty (NYSE:NRT), KCAP Financial Inc (NASDAQ:KCAP), INTL Fcstone Inc (NASDAQ:INTL), and MVC Capital, Inc. (NYSE:MVC). All of these stocks are in the diversified investments industry and their market caps are closest to MSB’s market cap.