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Towers Watson & Co (TW): Insiders Aren’t Crazy About It

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Towers Watson & Co (NYSE:TW) has experienced an increase in enthusiasm from smart money recently.

If you’d ask most investors, hedge funds are perceived as underperforming, old investment vehicles of the past. While there are more than 8000 funds in operation at present, we hone in on the masters of this group, close to 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total capital, and by paying attention to their highest performing stock picks, we have revealed a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced 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 (explore the details and some picks here).

Equally as important, bullish insider trading sentiment is another way to break down the investments you’re interested in. There are a number of motivations for an executive to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this method if shareholders know where to look (learn more here).

Keeping this in mind, it’s important to take a glance at the recent action surrounding Towers Watson & Co (NYSE:TW).

What have hedge funds been doing with Towers Watson & Co (NYSE:TW)?

In preparation for this quarter, a total of 19 of the hedge funds we track were bullish in this stock, a change of 19% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.

Towers Watson & Co (NYSE:TW)According to our comprehensive database, Chuck Royce’s Royce & Associates had the largest position in Towers Watson & Co (NYSE:TW), worth close to $154.4 million, accounting for 0.5% of its total 13F portfolio. The second largest stake is held by Ariel Investments, managed by John W. Rogers, which held a $67.2 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include D. E. Shaw’s D E Shaw, Martin D. Sass’s MD Sass and James Dinan’s York Capital Management.

As aggregate interest increased, some big names were leading the bulls’ herd. MD Sass, managed by Martin D. Sass, created the most outsized position in Towers Watson & Co (NYSE:TW). MD Sass had 33.3 million invested in the company at the end of the quarter. James Dinan’s York Capital Management also initiated a $25.8 million position during the quarter. The other funds with new positions in the stock are Donald Chiboucis’s Columbus Circle Investors, Jeffrey Vinik’s Vinik Asset Management, and Joel Greenblatt’s Gotham Asset Management.

How are insiders trading Towers Watson & Co (NYSE:TW)?

Insider buying is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the last half-year time period, Towers Watson & Co (NYSE:TW) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Towers Watson & Co (NYSE:TW). These stocks are FTI Consulting, Inc. (NYSE:FCN), Booz Allen Hamilton Holding Corporation (NYSE:BAH), The Corporate Executive Board Company (NYSE:CEB), Corrections Corp Of America (NYSE:CXW), and Genpact Limited (NYSE:G). All of these stocks are in the management services industry and their market caps are closest to TW’s market cap.

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