3M Co (NYSE:MMM): Hedge Funds and Insiders Are Bearish, What Should You Do?

3M Co (NYSE:MMM) was in 34 hedge funds’ portfolio at the end of December. MMM investors should pay attention to a decrease in hedge fund interest of late. There were 37 hedge funds in our database with MMM holdings at the end of the previous quarter.

To the average investor, there are many methods investors can use to track publicly traded companies. Two of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite money managers can beat the broader indices by a solid amount (see just how much).

Just as key, positive insider trading activity is a second way to parse down the financial markets. There are a variety of incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the useful potential of this strategy if you know where to look (learn more here).

Now, let’s take a gander at the latest action encompassing 3M Co (NYSE:MMM).

How have hedgies been trading 3M Co (NYSE:MMM)?

Heading into 2013, a total of 34 of the hedge funds we track were bullish in this stock, a change of -8% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably.

According to our comprehensive database, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the biggest position in 3M Co (NYSE:MMM). First Eagle Investment Management has a $531 million position in the stock, comprising 1.9% of its 13F portfolio. Coming in second is Boykin Curry of Eagle Capital Management, with a $375 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Edgar Wachenheim’s Greenhaven Associates, Ric Dillon’s Diamond Hill Capital and Cliff Asness’s AQR Capital Management.

Due to the fact that 3M Co (NYSE:MMM) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their entire stakes at the end of the year. It’s worth mentioning that Phill Gross and Robert Atchinson’s Adage Capital Management cut the biggest position of the 450+ funds we key on, valued at an estimated $198 million in stock.. Bart Baum’s fund, Ionic Capital Management, also cut its call options., about $46 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds at the end of the year.

Insider trading activity in 3M Co (NYSE:MMM)

Insider purchases made by high-level executives is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time period, 3M Co (NYSE:MMM) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s strategies, retail investors must always watch hedge fund and insider trading activity, and 3M Co (NYSE:MMM) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.