Should You Buy LKQ Corporation (LKQ)?

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LKQ Corporation (NASDAQ:LKQ) was in 19 hedge funds’ portfolio at the end of March. LKQ has experienced an increase in enthusiasm from smart money of late. There were 18 hedge funds in our database with LKQ positions at the end of the previous quarter.

If you’d ask most market participants, hedge funds are viewed as unimportant, outdated investment tools of years past. While there are over 8000 funds trading today, we choose to focus on the upper echelon of this club, about 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by monitoring their highest performing equity investments, we have determined a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as beneficial, optimistic insider trading sentiment is another way to parse down the investments you’re interested in. Obviously, there are a variety of motivations for an upper level exec to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this method if shareholders know where to look (learn more here).

With all of this in mind, it’s important to take a glance at the key action surrounding LKQ Corporation (NASDAQ:LKQ).

Hedge fund activity in LKQ Corporation (NASDAQ:LKQ)

At Q1’s end, a total of 19 of the hedge funds we track held long positions in this stock, a change of 6% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Cantillon Capital Management, managed by William von Mueffling, holds the biggest position in LKQ Corporation (NASDAQ:LKQ). Cantillon Capital Management has a $157.3 million position in the stock, comprising 5% of its 13F portfolio. On Cantillon Capital Management’s heels is Chilton Investment Company, managed by Richard Chilton, which held a $111.3 million position; 3% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Greg Poole’s Echo Street Capital Management, Chuck Royce’s Royce & Associates and Michael R. Weisberg’s Crestwood Capital Management.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Glenhill Advisors, managed by Glenn J. Krevlin, established the biggest position in LKQ Corporation (NASDAQ:LKQ). Glenhill Advisors had 9.5 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also made a $6 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.

Insider trading activity in LKQ Corporation (NASDAQ:LKQ)

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time period, LKQ Corporation (NASDAQ:LKQ) has experienced 1 unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to LKQ Corporation (NASDAQ:LKQ). These stocks are Allison Transmission Holdings Inc (NYSE:ALSN), BorgWarner Inc. (NYSE:BWA), Lear Corporation (NYSE:LEA), Autoliv Inc. (NYSE:ALV), and TRW Automotive Holdings Corp. (NYSE:TRW). This group of stocks belong to the auto parts industry and their market caps resemble LKQ’s market cap.

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