Is FutureFuel Corp. (NYSE:FF) a sound investment right now? The best stock pickers are in a bearish mood. The number of bullish hedge fund positions went down by 1 in recent months.
In the eyes of most investors, hedge funds are seen as slow, outdated financial vehicles of years past. While there are more than 8000 funds trading at the moment, we look at the leaders of this group, around 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total capital, and by monitoring their top picks, we have found a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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).
Equally as integral, positive insider trading sentiment is a second way to parse down the stock market universe. There are a variety of motivations for a bullish insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this tactic if shareholders understand what to do (learn more here).
With all of this in mind, let’s take a gander at the key action regarding FutureFuel Corp. (NYSE:FF).
What have hedge funds been doing with FutureFuel Corp. (NYSE:FF)?
At Q1’s end, a total of 10 of the hedge funds we track were long in this stock, a change of -9% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully.
According to our comprehensive database, MSD Capital, managed by Glenn Fuhrman and John Phelan, holds the biggest position in FutureFuel Corp. (NYSE:FF). MSD Capital has a $15.6 million position in the stock, comprising 2.8% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $8.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.
Due to the fact that FutureFuel Corp. (NYSE:FF) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of fund managers who were dropping their entire stakes last quarter. Interestingly, Philip Hempleman’s Ardsley Partners sold off the biggest position of all the hedgies we track, worth close to $0.5 million in stock., and Mike Vranos of Ellington was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds last quarter.
What have insiders been doing with FutureFuel Corp. (NYSE:FF)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time frame, FutureFuel Corp. (NYSE:FF) has experienced 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to FutureFuel Corp. (NYSE:FF). These stocks are Aceto Corporation (NASDAQ:ACET), LSB Industries, Inc. (NYSE:LXU), Landec Corporation (NASDAQ:LNDC), Solazyme Inc (NASDAQ:SZYM), and Rentech, Inc. (NYSEAMEX:RTK). This group of stocks are the members of the chemicals – major diversified industry and their market caps match FF’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Aceto Corporation (NASDAQ:ACET) | 3 | 0 | 8 |
| LSB Industries, Inc. (NYSE:LXU) | 13 | 0 | 8 |
| Landec Corporation (NASDAQ:LNDC) | 11 | 0 | 4 |
| Solazyme Inc (NASDAQ:SZYM) | 11 | 1 | 6 |
| Rentech, Inc. (NYSEAMEX:RTK) | 15 | 0 | 4 |
With the returns demonstrated by our tactics, retail investors must always keep an eye on hedge fund and insider trading sentiment, and FutureFuel Corp. (NYSE:FF) applies perfectly to this mantra.
