Is Precision Castparts Corp. (NYSE:PCP) going to take off soon? Money managers are selling. The number of bullish hedge fund bets went down by 2 lately.
In today’s marketplace, there are tons of gauges market participants can use to track their holdings. A pair of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a healthy amount (see just how much).
Equally as integral, positive insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are lots of motivations for an insider to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this strategy if investors know what to do (learn more here).
Keeping this in mind, we're going to take a glance at the recent action encompassing Precision Castparts Corp. (NYSE:PCP).
At the end of the fourth quarter, a total of 25 of the hedge funds we track were long in this stock, a change of -7% from the previous quarter. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes significantly.
According to our comprehensive database, Warren Buffett's Berkshire Hathaway had the biggest position in Precision Castparts Corp. (NYSE:PCP), worth close to $375 million billion, comprising 0.5% of its total 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $177 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Ken Griffin's Citadel Investment Group, Phill Gross and Robert Atchinson's Adage Capital Management and Christopher MedlockáJames's Partner Fund Management.
Since Precision Castparts Corp. (NYSE:PCP) has faced falling interest from the smart money, we can see that there exists a select few funds that elected to cut their positions entirely in Q4. It's worth mentioning that Jim Simons's Renaissance Technologies sold off the largest investment of all the hedgies we monitor, valued at about $84 million in stock., and Clint Carlson of Carlson Capital was right behind this move, as the fund sold off about $4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in Q4.
Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past 180 days. Over the latest half-year time frame, Precision Castparts Corp. (NYSE:PCP) has seen zero unique insiders buying, and 7 insider sales (see the details of insider trades here).
With the returns shown by the aforementioned tactics, retail investors should always keep an eye on hedge fund and insider trading activity, and Precision Castparts Corp. (NYSE:PCP) 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.