Is PACCAR Inc (NASDAQ:PCAR) a sound stock to buy now? The smart money is getting more optimistic. The number of bullish hedge fund bets moved up by 4 lately.
To most traders, hedge funds are seen as unimportant, outdated financial tools of yesteryear. While there are over 8000 funds trading at present, we hone in on the masters of this club, close to 450 funds. It is estimated that this group oversees the lion's share of the hedge fund industry's total capital, and by paying attention to their highest performing equity investments, we have spotted a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced 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 outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as key, bullish insider trading sentiment is a second way to break down the investments you're interested in. There are plenty of stimuli for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this tactic if "monkeys" know what to do (learn more here).
With these "truths" under our belt, let's take a gander at the recent action surrounding PACCAR Inc (NASDAQ:PCAR).
In preparation for this year, a total of 20 of the hedge funds we track were bullish in this stock, a change of 25% from the third quarter. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings meaningfully.
According to our comprehensive database, Bill Miller's Legg Mason Capital Management had the most valuable position in PACCAR Inc (NASDAQ:PCAR), worth close to $55 million, comprising 1% of its total 13F portfolio. Coming in second is Robert Joseph Caruso of Select Equity Group, with a $51 million call position; 0.2% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Israel Englander's Millennium Management, Dmitry Balyasny's Balyasny Asset Management and Phill Gross and Robert Atchinson's Adage Capital Management.
As industrywide interest jumped, some big names were leading the bulls' herd. Ionic Capital Management, managed by Bart Baum, established the largest call position in PACCAR Inc (NASDAQ:PCAR). Ionic Capital Management had 6 million invested in the company at the end of the quarter. Crispin Odey's Odey Asset Management Group also initiated a $5 million position during the quarter. The other funds with brand new pcar positions are Israel Englander's Millennium Management, Bruce Kovner's Caxton Associates LP, and Louis Bacon's Moore Global Investments.
Insider trading activity, especially when it's bullish, is most useful when the company we're looking at has experienced transactions within the past half-year. Over the latest six-month time period, PACCAR Inc (NASDAQ:PCAR) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
With the results demonstrated by Insider Monkey's strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and PACCAR Inc (NASDAQ:PCAR) 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.