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Airgas, Inc. (ARG): Are Hedge Funds Right About This Stock?

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If you were to ask many traders, hedge funds are perceived as delayed, outdated financial tools of a forgotten age. Although there are over 8,000 hedge funds trading in present day, Insider Monkey looks at the crème de la crème of this club, about 525 funds. It is assumed that this group oversees most of all hedge funds’ total capital, and by watching their highest quality stock picks, we’ve revealed a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as key, positive insider trading sentiment is another way to look at the stock market universe. As the old adage goes: there are a number of stimuli for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this tactic if investors understand where to look (learn more here).

Airgas, Inc. (NYSE:ARG)

Now that that’s out of the way, we’re going to study the newest info for Airgas, Inc. (NYSE:ARG).

What does the smart money think about Airgas, Inc. (NYSE:ARG)?

Heading into Q3, a total of 25 of the hedge funds we track were long in this stock, a change of 25% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings substantially.

Out of the hedge funds we follow, Jason Capello’s Merchants’ Gate Capital had the biggest position in Airgas, Inc. (NYSE:ARG), worth close to $157.9 million, comprising 7.6% of its total 13F portfolio. On Merchants’ Gate Capital’s heels is Select Equity Group, managed by Robert Joseph Caruso, which held a $136.3 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Richard Chilton’s Chilton Investment Company, Stephen Mandel’s Lone Pine Capital and John Lykouretzos’s Hoplite Capital Management.

Consequently, certain bigger names were leading the bulls’ herd. Merchants’ Gate Capital, managed by Jason Capello, created the most outsized position in Airgas, Inc. (NYSE:ARG). Merchants’ Gate Capital had 157.9 million invested in the company at the end of the quarter. Robert Joseph Caruso’s Select Equity Group also initiated a $136.3 million position during the quarter. The other funds with brand new ARG positions are Richard Chilton’s Chilton Investment Company, Stephen Mandel’s Lone Pine Capital, and John Lykouretzos’s Hoplite Capital Management.

What have insiders been doing with Airgas, Inc. (NYSE:ARG)?

Bullish insider trading is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest half-year time frame, Airgas, Inc. (NYSE:ARG) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Airgas, Inc. (NYSE:ARG). These stocks are Wesco Aircraft Holdings Inc (NYSE:WAIR), Applied Industrial Technologies (NYSE:AIT), WESCO International, Inc. (NYSE:WCC), W.W. Grainger, Inc. (NYSE:GWW), and MSC Industrial Direct Co Inc (NYSE:MSM). This group of stocks are the members of the industrial equipment wholesale industry and their market caps match ARG’s market cap.

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