Zoltek Companies, Inc. (NASDAQ:ZOLT) has experienced an increase in hedge fund sentiment recently.
If you’d ask most investors, hedge funds are seen as slow, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, we choose to focus on the aristocrats of this club, around 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 best equity investments, we have deciphered a number of investment strategies that have historically outpaced the broader indices. 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 outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as integral, optimistic insider trading sentiment is a second way to break down the stock market universe. Obviously, there are many reasons for an insider to cut shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).
Keeping this in mind, let’s take a peek at the recent action regarding Zoltek Companies, Inc. (NASDAQ:ZOLT).
What have hedge funds been doing with Zoltek Companies, Inc. (NASDAQ:ZOLT)?
In preparation for this year, a total of 9 of the hedge funds we track were long in this stock, a change of 29% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings considerably.
Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Zoltek Companies, Inc. (NASDAQ:ZOLT), worth close to $12 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by GMT Capital, managed by Thomas E. Claugus, which held a $3.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Ken Gray and Steve Walsh’s Bryn Mawr Capital.
Now, specific money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the largest position in Zoltek Companies, Inc. (NASDAQ:ZOLT). Two Sigma Advisors had 0.2 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is Glenn Russell Dubin’s Highbridge Capital Management.
What do corporate executives and insiders think about Zoltek Companies, Inc. (NASDAQ:ZOLT)?
Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past half-year. Over the latest six-month time frame, Zoltek Companies, Inc. (NASDAQ:ZOLT) has experienced 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Zoltek Companies, Inc. (NASDAQ:ZOLT). These stocks are Capstone Turbine Corporation (NASDAQ:CPST), Electro Scientific Industries, Inc. (NASDAQ:ESIO), Ameresco Inc (NYSE:AMRC), Preformed Line Products Company (NASDAQ:PLPC), and Daktronics, Inc. (NASDAQ:DAKT). All of these stocks are in the industrial electrical equipment industry and their market caps match ZOLT’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Capstone Turbine Corporation (NASDAQ:CPST)||5||0||1|
|Electro Scientific Industries, Inc. (NASDAQ:ESIO)||8||0||0|
|Ameresco Inc (NYSE:AMRC)||5||3||1|
|Preformed Line Products Company (NASDAQ:PLPC)||3||0||3|
|Daktronics, Inc. (NASDAQ:DAKT)||10||0||2|
With the returns shown by our strategies, everyday investors should always monitor hedge fund and insider trading activity, and Zoltek Companies, Inc. (NASDAQ:ZOLT) applies perfectly to this mantra.