TRW Automotive Holdings Corp. (NYSE:TRW) shareholders have witnessed a decrease in support from the world's most elite money managers lately.
In the financial world, there are many indicators investors can use to analyze publicly traded companies. Some of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top hedge fund managers can beat their index-focused peers by a significant margin (see just how much).
Equally as beneficial, positive insider trading activity is a second way to parse down the stock market universe. As the old adage goes: there are a number of incentives for a bullish insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if shareholders understand where to look (learn more here).
With these "truths" under our belt, we're going to take a glance at the key action encompassing TRW Automotive Holdings Corp. (NYSE:TRW).
In preparation for this year, a total of 23 of the hedge funds we track were long in this stock, a change of -23% from the previous quarter. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably.
Of the funds we track, Thomas E. Claugus's GMT Capital had the biggest position in TRW Automotive Holdings Corp. (NYSE:TRW), worth close to $137 million, accounting for 3.4% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $96 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Rob Citrone's Discovery Capital Management, Martin D. Sass's MD Sass and Cliff Asness's AQR Capital Management.
Judging by the fact that TRW Automotive Holdings Corp. (NYSE:TRW) has faced declining sentiment from the smart money, we can see that there were a few funds who sold off their full holdings heading into 2013. At the top of the heap, Marc Lasry's Avenue Capital cut the biggest stake of all the hedgies we track, comprising about $18 million in stock., and Phill Gross and Robert Atchinson of Adage Capital Management was right behind this move, as the fund dumped about $13 million worth. These moves are important to note, as total hedge fund interest was cut by 7 funds heading into 2013.
Insider buying is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest six-month time period, TRW Automotive Holdings Corp. (NYSE:TRW) has seen zero unique insiders buying, and 8 insider sales (see the details of insider trades here).
With the results shown by the aforementioned time-tested strategies, everyday investors must always watch hedge fund and insider trading activity, and TRW Automotive Holdings Corp. (NYSE:TRW) applies perfectly to this mantra.
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