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This Metric Says You Are Smart to Buy Graco Inc. (GGG)

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Should Graco Inc. (NYSE:GGG) investors track the following data?

In the eyes of many traders, hedge funds are perceived as delayed, outdated investment tools of a forgotten age. Although there are over 8,000 hedge funds with their doors open currently, this site aim at the crème de la crème of this group, around 525 funds. It is assumed that this group oversees most of all hedge funds’ total assets, and by keeping an eye on their highest performing picks, we’ve come up with a number of investment strategies that have historically beaten Mr. Market. 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 33 percentage points in 11 months (find the details here).

Just as necessary, positive insider trading activity is another way to analyze the world of equities. There are lots of motivations for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).

Keeping this in mind, we’re going to study the latest info for Graco Inc. (NYSE:GGG).

Graco Inc. (NYSE:GGG)

What have hedge funds been doing with Graco Inc. (NYSE:GGG)?

In preparation for the third quarter, a total of 13 of the hedge funds we track were long in this stock, a change of 8% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.

Out of the hedge funds we follow, Mario Gabelli’s GAMCO Investors had the most valuable position in Graco Inc. (NYSE:GGG), worth close to $74.3 million, comprising 0.5% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $52.7 million position; 0.2% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

As aggregate interest spiked, specific money managers have jumped into Graco Inc. (NYSE:GGG) headfirst. GAMCO Investors, managed by Mario Gabelli, established the most outsized position in Graco Inc. (NYSE:GGG). GAMCO Investors had 74.3 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $52.7 million investment in the stock during the quarter. The following funds were also among the new GGG investors: Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Jim Simons’s Renaissance Technologies, and Ken Griffin’s Citadel Investment Group.

How are insiders trading Graco Inc. (NYSE:GGG)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past half-year. Over the last half-year time period, Graco Inc. (NYSE:GGG) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Graco Inc. (NYSE:GGG). These stocks are Lennox International Inc. (NYSE:LII), Crane Co. (NYSE:CR), Babcock & Wilcox Co (NYSE:BWC), SPX Corporation (NYSE:SPW), and Gardner Denver, Inc. (NYSE:GDI). All of these stocks are in the diversified machinery industry and their market caps are closest to GGG’s market cap.

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