Should You Avoid Aqua America Inc (WTR)?

Aqua America Inc (NYSE:WTR) investors should be aware of a decrease in support from the world’s most elite money managers of late.

At the moment, there are dozens of indicators market participants can use to watch the equity markets. Two of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best fund managers can trounce the market by a very impressive amount (see just how much).

Chuck Royce

Just as important, positive insider trading activity is another way to break down the marketplace. As the old adage goes: there are many motivations for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this method if you know where to look (learn more here).

With these “truths” under our belt, it’s important to take a gander at the recent action surrounding Aqua America Inc (NYSE:WTR).

Hedge fund activity in Aqua America Inc (NYSE:WTR)

At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of -14% from the previous quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in Aqua America Inc (NYSE:WTR), worth close to $20.8 million, comprising 0.1% of its total 13F portfolio. On Royce & Associates’s heels is John I. Dickerson of Summit Global Management, with a $5.6 million position; 5% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.

Seeing as Aqua America Inc (NYSE:WTR) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedge funds that slashed their full holdings heading into 2013. At the top of the heap, Philip Hempleman’s Ardsley Partners sold off the biggest position of the 450+ funds we track, totaling an estimated $1.9 million in stock., and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund said goodbye to about $1.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds heading into 2013.

How have insiders been trading Aqua America Inc (NYSE:WTR)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the last 180-day time period, Aqua America Inc (NYSE:WTR) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Aqua America Inc (NYSE:WTR). These stocks are Connecticut Water Service, Inc. (NASDAQ:CTWS), SJW Corp. (NYSE:SJW), California Water Service Group (NYSE:CWT), American States Water Co (NYSE:AWR), and American Water Works Co., Inc. (NYSE:AWK). This group of stocks are the members of the water utilities industry and their market caps are closest to WTR’s market cap.