Should You Avoid The Toro Company (TTC)?

The Toro Company (NYSE:TTC) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. TTC shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. There were 15 hedge funds in our database with TTC holdings at the end of the previous quarter.

The Toro Company (NYSE:TTC)

According to most traders, hedge funds are assumed to be underperforming, outdated financial tools of years past. While there are more than 8000 funds trading at the moment, we choose to focus on the crème de la crème of this club, about 450 funds. It is widely believed that this group oversees most of all hedge funds’ total capital, and by monitoring their best equity investments, we have spotted a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as integral, optimistic insider trading activity is a second way to break down the financial markets. As the old adage goes: there are a number of incentives for an executive to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this method if you understand where to look (learn more here).

Consequently, we’re going to take a look at the latest action encompassing The Toro Company (NYSE:TTC).

What does the smart money think about The Toro Company (NYSE:TTC)?

At Q1′s end, a total of 15 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially.

When looking at the hedgies we track, Ken Fisher’s Fisher Asset Management had the biggest position in The Toro Company (NYSE:TTC), worth close to $42.1 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $30.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Ken Griffin’s Citadel Investment Group and Ric Dillon’s Diamond Hill Capital.

Judging by the fact that The Toro Company (NYSE:TTC) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers who were dropping their full holdings at the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest stake of the “upper crust” of funds we watch, worth about $1.9 million in stock., and Ian Simm of Impax Asset Management was right behind this move, as the fund sold off about $1.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading The Toro Company (NYSE:TTC)?

Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past half-year. Over the latest six-month time period, The Toro Company (NYSE:TTC) has experienced 1 unique insiders purchasing, and 10 insider sales (see the details of insider trades here).

With the returns shown by our time-tested strategies, everyday investors must always watch hedge fund and insider trading activity, and The Toro Company (NYSE:TTC) is no exception.

Click here to learn why you should track hedge funds

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Insider Monkey Small Cap Strategy
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