Is Green Plains Renewable Energy Inc. (NASDAQ:GPRE) a superb investment now? The smart money is getting less optimistic. The number of long hedge fund bets were trimmed by 2 in recent months.
To most investors, hedge funds are perceived as slow, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the elite of this club, about 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total asset base, and by watching their top investments, we have revealed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as key, bullish insider trading sentiment is another way to break down the marketplace. Obviously, there are many incentives for an insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the useful potential of this tactic if you know what to do (learn more here).
Now, it’s important to take a peek at the key action regarding Green Plains Renewable Energy Inc. (NASDAQ:GPRE).
How have hedgies been trading Green Plains Renewable Energy Inc. (NASDAQ:GPRE)?
In preparation for this year, a total of 7 of the hedge funds we track were long in this stock, a change of -22% from the third quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully.
When looking at the hedgies we track, Jonathan Kolatch’s Redwood Capital Management had the largest position in Green Plains Renewable Energy Inc. (NASDAQ:GPRE), worth close to $5.2 million, comprising 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Malcolm Fairbairn of Ascend Capital, with a $1.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, Chuck Royce’s Royce & Associates and Israel Englander’s Millennium Management.
Because Green Plains Renewable Energy Inc. (NASDAQ:GPRE) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there were a few fund managers that decided to sell off their entire stakes heading into 2013. Interestingly, Dwight Anderson’s Ospraie Management dumped the biggest investment of the “upper crust” of funds we track, totaling about $3.9 million in stock., and Philip Hempleman of Ardsley Partners was right behind this move, as the fund dropped about $0.3 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds heading into 2013.
How have insiders been trading Green Plains Renewable Energy Inc. (NASDAQ:GPRE)?
Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past 180 days. Over the latest six-month time period, Green Plains Renewable Energy Inc. (NASDAQ:GPRE) has experienced 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Green Plains Renewable Energy Inc. (NASDAQ:GPRE). These stocks are REX American Resources Corp (NYSE:REX), Oil-Dri Corporation of America (NYSE:ODC), Ferro Corporation (NYSE:FOE) and OMNOVA Solutions Inc. (NYSE:OMN). This group of stocks are the members of the specialty chemicals industry and their market caps resemble GPRE’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|REX American Resources Corp (NYSE:REX)||3||0||0|
|Oil-Dri Corporation of America (NYSE:ODC)||2||0||3|
|Ferro Corporation (NYSE:FOE)||17||0||0|
|OMNOVA Solutions Inc. (NYSE:OMN)||13||0||0|
With the results shown by Insider Monkey’s time-tested strategies, everyday investors must always watch hedge fund and insider trading sentiment, and Green Plains Renewable Energy Inc. (NASDAQ:GPRE) is no exception.