Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) was in 33 hedge funds' portfolio at the end of December. ETN has seen an increase in hedge fund interest of late. There were 31 hedge funds in our database with ETN holdings at the end of the previous quarter.
According to most traders, hedge funds are assumed to be slow, old investment tools of yesteryear. While there are over 8000 funds in operation at the moment, we look at the moguls of this club, around 450 funds. It is widely believed that this group has its hands on most of all hedge funds' total asset base, and by tracking their top equity investments, we have formulated a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 25 percentage points in 6.5 month (see the details here).
Just as key, positive insider trading sentiment is another way to parse down the investments you're interested in. There are a variety of reasons for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would buy. Many empirical studies have demonstrated the useful potential of this method if piggybackers know where to look (learn more here).
Keeping this in mind, it's important to take a glance at the key action regarding Eaton Corporation, PLC Ordinary Shares (NYSE:ETN).
At year's end, a total of 33 of the hedge funds we track were long in this stock, a change of 6% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings substantially.
When looking at the hedgies we track, Levin Capital Strategies, managed by John A. Levin, holds the largest position in Eaton Corporation, PLC Ordinary Shares (NYSE:ETN). Levin Capital Strategies has a $230 million position in the stock, comprising 4.6% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which held a $202 million position; 6.9% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Christopher MedlockáJames's Partner Fund Management, Steven Cohen's SAC Capital Advisors and Thomas E. Claugus's GMT Capital.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Partner Fund Management, managed by Christopher MedlockáJames, created the most outsized position in Eaton Corporation, PLC Ordinary Shares (NYSE:ETN). Partner Fund Management had 163 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also initiated a $51 million position during the quarter. The following funds were also among the new ETN investors: Anand Parekh's Alyeska Investment Group, Douglas Dillard Jr. and Raj D. Venkatesan's Standard Pacific Capital, and Larry Foley and Paul Farrell's Bronson Point Partners.
Insider buying is best served when the company in question has seen transactions within the past six months. Over the latest half-year time frame, Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
With the returns shown by the aforementioned research, retail investors must always watch hedge fund and insider trading sentiment, and Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) applies perfectly to this mantra.
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.