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RBC Bearings Incorporated (ROLL): Are Hedge Funds Right About This Stock?

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RBC Bearings Incorporated (NASDAQ:ROLL) has seen a decrease in enthusiasm from smart money of late.

According to most investors, hedge funds are viewed as underperforming, old financial tools of yesteryear. While there are over 8000 funds trading today, we choose to focus on the aristocrats of this group, about 450 funds. Most estimates calculate that this group oversees most of all hedge funds’ total asset base, and by paying attention to their top picks, we have figured out a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).


Just as important, positive insider trading sentiment is another way to break down the stock market universe. Obviously, there are a variety of incentives for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the market-beating potential of this tactic if piggybackers understand what to do (learn more here).

With all of this in mind, it’s important to take a look at the recent action surrounding RBC Bearings Incorporated (NASDAQ:ROLL).

How are hedge funds trading RBC Bearings Incorporated (NASDAQ:ROLL)?

Heading into 2013, a total of 5 of the hedge funds we track were long in this stock, a change of -38% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes substantially.

Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in RBC Bearings Incorporated (NASDAQ:ROLL), worth close to $35.1 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $0.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Ken Gray and Steve Walsh’s Bryn Mawr Capital, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw.

Since RBC Bearings Incorporated (NASDAQ:ROLL) has experienced a declination in interest from the aggregate hedge fund industry, logic holds that there exists a select few funds that slashed their entire stakes in Q4. At the top of the heap, Richard Driehaus’s Driehaus Capital dumped the largest stake of all the hedgies we track, comprising close to $2.5 million in stock.. Joel Greenblatt’s fund, Gotham Asset Management, also said goodbye to its stock, about $0.4 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds in Q4.

What do corporate executives and insiders think about RBC Bearings Incorporated (NASDAQ:ROLL)?

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, RBC Bearings Incorporated (NASDAQ:ROLL) has experienced zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to RBC Bearings Incorporated (NASDAQ:ROLL). These stocks are MRC Global Inc (NYSE:MRC), Kennametal Inc. (NYSE:KMT), Blount International, Inc. (NYSE:BLT), Kaydon Corporation (NYSE:KDN), and Proto Labs Inc (NYSE:PRLB). All of these stocks are in the machine tools & accessories industry and their market caps match ROLL’s market cap.

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