This Metric Says You Are Smart to Sell Donaldson Company, Inc. (DCI)

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Donaldson Company, Inc. (NYSE:DCI) was in 14 hedge funds’ portfolio at the end of the first quarter of 2013. DCI investors should pay attention to a decrease in enthusiasm from smart money lately. There were 15 hedge funds in our database with DCI positions at the end of the previous quarter.

Donaldson Company, Inc. (NYSE:DCI)

If you’d ask most market participants, hedge funds are seen as slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, we choose to focus on the moguls of this group, close to 450 funds. It is widely believed that this group has its hands on most of all hedge funds’ total capital, and by tracking their best picks, we have unsheathed a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as beneficial, bullish insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are a number of stimuli for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this tactic if piggybackers know what to do (learn more here).

Consequently, it’s important to take a look at the key action regarding Donaldson Company, Inc. (NYSE:DCI).

How have hedgies been trading Donaldson Company, Inc. (NYSE:DCI)?

At Q1’s end, a total of 14 of the hedge funds we track were bullish in this stock, a change of -7% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, GAMCO Investors, managed by Mario Gabelli, holds the most valuable position in Donaldson Company, Inc. (NYSE:DCI). GAMCO Investors has a $79.8 million position in the stock, comprising 0.5% of its 13F portfolio. On GAMCO Investors’s heels is Royce & Associates, managed by Chuck Royce, which held a $42.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.

Since Donaldson Company, Inc. (NYSE:DCI) has faced bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedge funds who sold off their full holdings at the end of the first quarter. Interestingly, Ian Simm’s Impax Asset Management cut the largest stake of the “upper crust” of funds we monitor, totaling about $14.3 million in stock.. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also said goodbye to its stock, about $0.6 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds at the end of the first quarter.

Insider trading activity in Donaldson Company, Inc. (NYSE:DCI)

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the last half-year time frame, Donaldson Company, Inc. (NYSE:DCI) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Donaldson Company, Inc. (NYSE:DCI). These stocks are ADA-ES, Inc. (NASDAQ:ADES), Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), Tennant Company (NYSE:TNC), Calgon Carbon Corporation (NYSE:CCC), and CLARCOR Inc. (NYSE:CLC). This group of stocks are the members of the pollution & treatment controls industry and their market caps match DCI’s market cap.

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