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This Metric Says You Are Smart to Sell Natural Resource Partners LP (NRP)

Natural Resource Partners LP (NYSE:NRP) investors should be aware of a decrease in support from the world’s most elite money managers of late.

According to most investors, hedge funds are seen as underperforming, old financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the crème de la crème of this club, close to 450 funds. It is widely believed that this group has its hands on the lion’s share of the smart money’s total capital, and by keeping an eye on their top stock picks, we have uncovered a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as beneficial, positive insider trading sentiment is another way to parse down the marketplace. Obviously, there are a variety of motivations for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this method if “monkeys” understand what to do (learn more here).

With all of this in mind, we’re going to take a peek at the latest action encompassing Natural Resource Partners LP (NYSE:NRP).

How have hedgies been trading Natural Resource Partners LP (NYSE:NRP)?

At the end of the first quarter, a total of 4 of the hedge funds we track were long in this stock, a change of -20% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.

Chuck Royce

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Natural Resource Partners LP (NYSE:NRP). Royce & Associates has a $13.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates’s heels is PEAK6 Capital Management, managed by Matthew Hulsizer, which held a $5 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism include Tom Gayner’s Markel Gayner Asset Management, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Natural Resource Partners LP (NYSE:NRP) has witnessed a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers that elected to cut their full holdings last quarter. Intriguingly, Jim Simons’s Renaissance Technologies sold off the biggest stake of the 450+ funds we track, worth close to $6.3 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund dropped about $0.6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.

Insider trading activity in Natural Resource Partners LP (NYSE:NRP)

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, Natural Resource Partners LP (NYSE:NRP) has seen 4 unique insiders purchasing, 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 Natural Resource Partners LP (NYSE:NRP). These stocks are Titanium Metals Corp (NYSE:TIE), PVR Partners LP (NYSE:PVR), Alliance Resource Partners, L.P. (NASDAQ:ARLP), Compass Minerals International, Inc. (NYSE:CMP), and Tahoe Resources Inc (NYSE:TAHO). This group of stocks belong to the industrial metals & minerals industry and their market caps are closest to NRP’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Titanium Metals Corp (NYSE:TIE) 7 2 0
PVR Partners LP (NYSE:PVR) 4 4 3
Alliance Resource Partners, L.P. (NASDAQ:ARLP) 4 1 2
Compass Minerals International, Inc. (NYSE:CMP) 10 0 4
Tahoe Resources Inc (NYSE:TAHO) 6 0 0

With the returns exhibited by the aforementioned strategies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Natural Resource Partners LP (NYSE:NRP) applies perfectly to this mantra.

Click here to learn why you should track hedge funds

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