Should You Avoid Quality Distribution, Inc. (QLTY)?

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Quality Distribution, Inc. (NASDAQ:QLTY) was in 5 hedge funds’ portfolio at the end of the first quarter of 2013. QLTY has experienced a decrease in activity from the world’s largest hedge funds lately. There were 7 hedge funds in our database with QLTY holdings at the end of the previous quarter.

David Shaw

In the 21st century investor’s toolkit, there are plenty of metrics shareholders can use to watch their holdings. A couple of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best investment managers can beat the S&P 500 by a significant margin (see just how much).

Equally as beneficial, positive insider trading sentiment is a second way to parse down the financial markets. Just as you’d expect, there are many motivations for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this tactic if “monkeys” know what to do (learn more here).

With these “truths” under our belt, let’s take a glance at the latest action regarding Quality Distribution, Inc. (NASDAQ:QLTY).

What does the smart money think about Quality Distribution, Inc. (NASDAQ:QLTY)?

At Q1’s end, a total of 5 of the hedge funds we track held long positions in this stock, a change of -29% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Quincy Lee’s Ancient Art (Teton Capital) had the biggest position in Quality Distribution, Inc. (NASDAQ:QLTY), worth close to $5.1 million, comprising 1.3% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by D. E. Shaw, which held a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’s AQR Capital Management and Mike Vranos’s Ellington.

Because Quality Distribution, Inc. (NASDAQ:QLTY) has witnessed declining sentiment from the smart money, we can see that there lies a certain “tier” of funds that decided to sell off their entire stakes last quarter. Intriguingly, Israel Englander’s Millennium Management dumped the biggest position of the 450+ funds we monitor, valued at close to $0.6 million in stock.. Jim Simons’s fund, Renaissance Technologies, also dumped its stock, about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.

What have insiders been doing with Quality Distribution, Inc. (NASDAQ:QLTY)?

Insider buying is best served when the company in focus has experienced transactions within the past six months. Over the last 180-day time frame, Quality Distribution, Inc. (NASDAQ:QLTY) has experienced 5 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Quality Distribution, Inc. (NASDAQ:QLTY). These stocks are Vitran Corporation, Inc. (USA) (NASDAQ:VTNC), Celadon Group, Inc. (NYSE:CGI), Marten Transport, Ltd (NASDAQ:MRTN), Arkansas Best Corporation (NASDAQ:ABFS), and Patriot Transportation Holding, Inc. (NASDAQ:PATR). This group of stocks belong to the trucking industry and their market caps resemble QLTY’s market cap.

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