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Is Rockwell Automation (ROK) Going to Burn These Hedge Funds?

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Now, according to many traders, hedge funds are seen as overrated, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, this site looks at the elite of this group, around 525 funds. It is widely held that this group has its hands on the majority of all hedge funds’ total capital, and by tracking their highest performing picks, we’ve discovered a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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 33 percentage points in 11 months (find the details here).

Just as necessary, positive insider trading sentiment is another way to analyze the investments you’re interested in. As the old adage goes: there are many incentives for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this strategy if shareholders know where to look (learn more here).

Furthermore, let’s discuss the recent info surrounding Rockwell Automation (NYSE:ROK).

Hedge fund activity in Rockwell Automation (NYSE:ROK)

Heading into Q3, a total of 27 of the hedge funds we track were bullish in this stock, a change of 4% 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 boosting their holdings significantly.

Rockwell Automation (NYSE:ROK)Out of the hedge funds we follow, Natixis Global Asset Management’s Harris Associates had the biggest position in Rockwell Automation (NYSE:ROK), worth close to $532 million, accounting for 1.1% of its total 13F portfolio. On Harris Associates’s heels is Christopher Medlock James of Partner Fund Management, with a $83 million position; 1.7% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include John A. Levin’s Levin Capital Strategies, Mario Gabelli’s GAMCO Investors and Jim Simons’s Renaissance Technologies.

As industrywide interest increased, specific money managers were leading the bulls’ herd. Partner Fund Management, managed by Christopher MedlockáJames, created the largest position in Rockwell Automation (NYSE:ROK). Partner Fund Management had 83 million invested in the company at the end of the quarter. John A. Levin’s Levin Capital Strategies also initiated a $52 million position during the quarter. The following funds were also among the new ROK investors: Mario Gabelli’s GAMCO Investors, Jim Simons’s Renaissance Technologies, and David Harding’s Winton Capital Management.

What do corporate executives and insiders think about Rockwell Automation (NYSE:ROK)?

Insider buying made by high-level executives is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time frame, Rockwell Automation (NYSE:ROK) has seen zero unique insiders purchasing, and 14 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 Rockwell Automation (NYSE:ROK). These stocks are A. O. Smith Corporation (NYSE:AOS), REGAL-BELOIT CORPORATION (NYSE:RBC), Eaton Corporation, PLC Ordinary Shares (NYSE:ETN), Nidec Corporation (ADR) (NYSE:NJ), and AMETEK, Inc. (NYSE:AME). This group of stocks belong to the industrial electrical equipment industry and their market caps match ROK’s market cap.

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