Hedge Funds Aren’t Crazy About Edgen Group Inc (EDG) Anymore

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Edgen Group Inc (NYSE:EDG) was in 8 hedge funds’ portfolio at the end of March. EDG shareholders have witnessed a decrease in hedge fund sentiment recently. There were 10 hedge funds in our database with EDG holdings at the end of the previous quarter.

If you’d ask most investors, hedge funds are seen as worthless, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation at present, we at Insider Monkey choose to focus on the bigwigs of this club, close to 450 funds. It is widely believed that this group controls the majority of the smart money’s total capital, and by keeping an eye on their highest performing stock picks, we have found a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as key, bullish insider trading activity is another way to parse down the world of equities. Obviously, there are lots of motivations for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this strategy if piggybackers understand where to look (learn more here).

Consequently, it’s important to take a look at the latest action surrounding Edgen Group Inc (NYSE:EDG).

How are hedge funds trading Edgen Group Inc (NYSE:EDG)?

At the end of the first quarter, a total of 8 of the hedge funds we track were long in this stock, a change of -20% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.

Edgen Group Inc (EDG)Of the funds we track, Passport Capital, managed by John Burbank, holds the biggest position in Edgen Group Inc (NYSE:EDG). Passport Capital has a $7.3 million position in the stock, comprising 0.3% of its 13F portfolio. On Passport Capital’s heels is Mark Kingdon of Kingdon Capital, with a $4.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that hold long positions include Richard Driehaus’s Driehaus Capital, Ryan Schaper’s Point Lobos Capital and Brian Taylor’s Pine River Capital Management.

Due to the fact that Edgen Group Inc (NYSE:EDG) has experienced declining sentiment from the smart money, logic holds that there is a sect of fund managers that slashed their entire stakes last quarter. Interestingly, John Fichthorn’s Dialectic Capital Management said goodbye to the largest investment of all the hedgies we key on, comprising an estimated $0.5 million in stock., and Mike Vranos of Ellington was right behind this move, as the fund dropped about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.

What have insiders been doing with Edgen Group Inc (NYSE:EDG)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, Edgen Group Inc (NYSE:EDG) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Edgen Group Inc (NYSE:EDG). These stocks are RTI International Metals, Inc. (NYSE:RTI), Susser Petroleum Partners LP (NYSE:SUSP), Newport Corporation (NASDAQ:NEWP), Lawson Products, Inc. (NASDAQ:LAWS), and Houston Wire & Cable Company (NASDAQ:HWCC). All of these stocks are in the industrial equipment wholesale industry and their market caps are similar to EDG’s market cap.

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