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Hedge Funds Are Betting On W.R. Grace & Co. (NYSE:GRA)

W.R. Grace & Co. (NYSE:GRA) was in 37 hedge funds’ portfolio at the end of the fourth quarter of 2012. GRA has seen an increase in hedge fund interest of late. There were 36 hedge funds in our database with GRA holdings at the end of the previous quarter.

W.R. Grace & Co.

According to most market participants, hedge funds are perceived as slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds trading today, we at Insider Monkey look at the bigwigs of this club, close to 450 funds. It is widely believed that this group has its hands on most of the smart money’s total asset base, and by watching their top equity investments, we have brought to light a few 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 topped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Equally as integral, optimistic insider trading activity is another way to break down the investments you’re interested in. There are a variety of incentives for an executive to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if “monkeys” understand what to do (learn more here).

Consequently, let’s take a glance at the latest action regarding W.R. Grace & Co. (NYSE:GRA).

How have hedgies been trading W.R. Grace & Co. (NYSE:GRA)?

At year’s end, a total of 37 of the hedge funds we track were long in this stock, a change of 3% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially.

Of the funds we track, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the biggest position in W.R. Grace & Co. (NYSE:GRA). Iridian Asset Management has a $238 million billion position in the stock, comprising 3.9% of its 13F portfolio. The second largest stake is held by Tiger Global Management LLC, which held a $190 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include John Griffin’s Blue Ridge Capital, Richard Chilton’s Chilton Investment Company and Jonathan Auerbach’s Hound Partners.

Now, specific money managers were leading the bulls’ herd. OZ Management, managed by Daniel S. Och, assembled the most outsized position in W.R. Grace & Co. (NYSE:GRA). OZ Management had 82 million invested in the company at the end of the quarter. Edward A. Mule’s Silver Point Capital also made a $13 million investment in the stock during the quarter. The other funds with brand new GRA positions are Jeffrey Vinik’s Vinik Asset Management, Stephen J. Errico’s Locust Wood Capital Advisers, and Phil Frohlich’s Prescott Group Capital Management.

How are insiders trading W.R. Grace & Co. (NYSE:GRA)?

Insider buying is most useful when the company in question has seen transactions within the past half-year. Over the last 180-day time period, W.R. Grace & Co. (NYSE:GRA) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

With the results demonstrated by the aforementioned research, retail investors must always watch hedge fund and insider trading sentiment, and W.R. Grace & Co. (NYSE:GRA) is an important part of this process.

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.

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