A. O. Smith Corporation (AOS): Insiders Are Dumping, Should You? – Belden Inc. (BDC), Woodward Inc (WWD)

Page 1 of 2

A. O. Smith Corporation (NYSE:AOS) investors should pay attention to a decrease in hedge fund sentiment of late.

A. O. Smith Corporation (NYSE:AOS)

If you’d ask most traders, hedge funds are seen as slow, outdated financial vehicles of the past. While there are greater than 8000 funds trading at present, we choose to focus on the bigwigs of this group, around 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total capital, and by paying attention to their best equity investments, we have figured out a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 topped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as integral, positive insider trading sentiment is a second way to parse down the marketplace. There are many motivations for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

Consequently, it’s important to take a look at the recent action surrounding A. O. Smith Corporation (NYSE:AOS).

What have hedge funds been doing with A. O. Smith Corporation (NYSE:AOS)?

In preparation for this year, a total of 9 of the hedge funds we track were bullish in this stock, a change of -36% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly.

When looking at the hedgies we track, Donald Chiboucis’s Columbus Circle Investors had the biggest position in A. O. Smith Corporation (NYSE:AOS), worth close to $40 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $31 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include Cliff Asness’s AQR Capital Management, Andrew Sandler’s Sandler Capital Management and Israel Englander’s Millennium Management.

Because A. O. Smith Corporation (NYSE:AOS) has witnessed falling interest from hedge fund managers, it’s easy to see that there exists a select few hedge funds who sold off their positions entirely at the end of the year. Interestingly, Phill Gross and Robert Atchinson’s Adage Capital Management said goodbye to the biggest investment of the “upper crust” of funds we monitor, valued at an estimated $19 million in stock.. David Costen Haley’s fund, HBK Investments, also said goodbye to its stock, about $6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds at the end of the year.

What have insiders been doing with A. O. Smith Corporation (NYSE:AOS)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past half-year. Over the last 180-day time period, A. O. Smith Corporation (NYSE:AOS) has experienced zero unique insiders purchasing, and 13 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to A. O. Smith Corporation (NYSE:AOS). These stocks are General Cable Corporation (NYSE:BGC), EnerSys (NYSE:ENS), Belden Inc. (NYSE:BDC), Woodward Inc (NASDAQ:WWD), and REGAL-BELOIT CORPORATION (NYSE:RBC). This group of stocks are the members of the industrial electrical equipment industry and their market caps are similar to AOS’s market cap.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!