Should you hold on to PPG Industries, Inc. (NYSE:PPG)?
Now, according to many traders, hedge funds are viewed as delayed, outdated investment vehicles of a period lost to current times. Although there are more than 8,000 hedge funds in operation in present day, Insider Monkey looks at the top tier of this group, around 525 funds. Analysts calculate that this group has its hands on most of all hedge funds' total capital, and by watching their highest performing investments, we've discovered a few investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy outstripped 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 beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Equally as key, bullish insider trading sentiment is another way to analyze the stock market universe. Obviously, there are many incentives for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this tactic if shareholders know what to do (learn more here).
Thus, let's discuss the recent info for PPG Industries, Inc. (NYSE:PPG).
Heading into Q3, a total of 32 of the hedge funds we track held long positions in this stock, a change of -18% from the previous quarter. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings substantially.
When using filings from the hedgies we track, Daniel S. Och's OZ Management had the largest position in PPG Industries, Inc. (NYSE:PPG), worth close to $263.3 million, accounting for 0.8% of its total 13F portfolio. On OZ Management's heels is Brookside Capital, managed by Bain Capital, which held a $225.5 million position; 5.3% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Ken Griffin's Citadel Investment Group, Jim Simons's Renaissance Technologies and Donald Chiboucis's Columbus Circle Investors.
Judging by the fact that PPG Industries, Inc. (NYSE:PPG) has experienced a fall in interest from the top-tier hedge fund industry, logic holds that there lies a certain "tier" of fund managers that slashed their full holdings at the end of the second quarter. Intriguingly, Richard S. Pzena's Pzena Investment Management cut the largest investment of the 450+ funds we track, worth about $115.1 million in stock. James Dinan's fund, York Capital Management, also dropped its stock, about $28.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 7 funds at the end of the second quarter.
Insider buying made by high-level executives is most useful when the company in focus has experienced transactions within the past 180 days. Over the last six-month time period, PPG Industries, Inc. (NYSE:PPG) has seen zero unique insiders buying, and 9 insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to PPG Industries, Inc. (NYSE:PPG). These stocks are Westlake Chemical Corporation (NYSE:WLK), Sigma-Aldrich Corporation (NASDAQ:SIAL), LyondellBasell Industries NV (NYSE:LYB), Williams Partners L.P. (NYSE:WPZ), and Sherwin-Williams Company (NYSE:SHW). All of these stocks are in the specialty chemicals industry and their market caps match PPG's market cap.