Praxair, Inc. (NYSE:PX) was in 22 hedge funds' portfolio at the end of the fourth quarter of 2012. PX investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 25 hedge funds in our database with PX holdings at the end of the previous quarter.
According to most shareholders, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are greater than 8000 funds trading at the moment, we look at the bigwigs of this club, close to 450 funds. It is widely believed that this group oversees the majority of the smart money's total asset base, and by paying attention to their highest performing picks, we have figured out a number of investment strategies that have historically outpaced Mr. Market. 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 began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as key, optimistic insider trading activity is a second way to break down the marketplace. Obviously, there are a number of incentives for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).
Now, we're going to take a look at the latest action surrounding Praxair, Inc. (NYSE:PX).
Heading into 2013, a total of 22 of the hedge funds we track held long positions in this stock, a change of -12% from the previous quarter. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully.
Of the funds we track, Eagle Capital Management, managed by Boykin Curry, holds the most valuable position in Praxair, Inc. (NYSE:PX). Eagle Capital Management has a $555 million position in the stock, comprising 3.9% of its 13F portfolio. On Eagle Capital Management's heels is Ken Griffin of Citadel Investment Group, with a $51 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Edgar Wachenheim's Greenhaven Associates, Bernard Horn's Polaris Capital Management and Phill Gross and Robert Atchinson's Adage Capital Management.
Since Praxair, Inc. (NYSE:PX) has experienced declining sentiment from hedge fund managers, it's easy to see that there was a specific group of funds that slashed their positions entirely at the end of the year. Interestingly, D. E. Shaw's D E Shaw said goodbye to the largest position of the 450+ funds we key on, valued at about $4 million in call options, and Richard Driehaus of Driehaus Capital was right behind this move, as the fund cut about $2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds at the end of the year.
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past 180 days. Over the last six-month time period, Praxair, Inc. (NYSE:PX) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
With the returns shown by Insider Monkey's strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Praxair, Inc. (NYSE:PX) 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.