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Mueller Industries, Inc. (MLI): Insiders Aren’t Crazy About It But Hedge Funds Love It

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To many investors, hedge funds are assumed to be overrated, outdated financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, Insider Monkey focuses on the upper echelon of this group, close to 525 funds. It is assumed that this group controls most of the hedge fund industry’s total assets, and by keeping an eye on their highest quality picks, we’ve deciphered a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a 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 beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as key, optimistic insider trading activity is a second way to look at the investments you’re interested in. Just as you’d expect, there are a variety of motivations for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if shareholders understand what to do (learn more here).

Thus, let’s analyze the latest info about Mueller Industries, Inc. (NYSE:MLI).

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How have hedgies been trading Mueller Industries, Inc. (NYSE:MLI)?

In preparation for the third quarter, a total of 22 of the hedge funds we track were bullish in this stock, a change of 5% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully.

Out of the hedge funds we follow, Jeffrey Gates’s Gates Capital Management had the most valuable position in Mueller Industries, Inc. (NYSE:MLI), worth close to $75 million, accounting for 3.4% of its total 13F portfolio. On Gates Capital Management’s heels is GAMCO Investors, managed by Mario Gabelli, which held a $53.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Chuck Royce’s Royce & Associates, Ken Fisher’s Fisher Asset Management and Paul Reeder and Edward Shapiro’s PAR Capital Management.

With a general bullishness amongst the titans, certain money managers have jumped into Mueller Industries, Inc. (NYSE:MLI) headfirst. Gates Capital Management, managed by Jeffrey Gates, established the most valuable position in Mueller Industries, Inc. (NYSE:MLI). Gates Capital Management had 75 million invested in the company at the end of the quarter. Mario Gabelli’s GAMCO Investors also initiated a $53.2 million position during the quarter. The other funds with brand new MLI positions are Chuck Royce’s Royce & Associates, Ken Fisher’s Fisher Asset Management, and Paul ReederáandáEdward Shapiro’s PAR Capital Management.

How have insiders been trading Mueller Industries, Inc. (NYSE:MLI)?

Legal insider trading, particularly when it’s bullish, is particularly usable when the company in question has seen transactions within the past six months. Over the last six-month time period, Mueller Industries, Inc. (NYSE:MLI) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Mueller Industries, Inc. (NYSE:MLI). These stocks are Chart Industries, Inc. (NASDAQ:GTLS), Matthews International Corp (NASDAQ:MATW), Worthington Industries, Inc. (NYSE:WOR), Sims Metal Management Ltd (ADR) (NYSE:SMS), and AZZ Incorporated (NYSE:AZZ). This group of stocks are the members of the metal fabrication industry and their market caps resemble MLI’s market cap.

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