TMS International Corp. (NYSE:TMS) was in 9 hedge funds’ portfolio at the end of December. TMS has seen an increase in activity from the world’s largest hedge funds in recent months. There were 6 hedge funds in our database with TMS positions at the end of the previous quarter.
In the eyes of most market participants, hedge funds are viewed as unimportant, old investment vehicles of years past. While there are greater than 8000 funds in operation today, we at Insider Monkey choose to focus on the top tier of this club, around 450 funds. Most estimates calculate that this group controls the majority of all hedge funds’ total capital, and by watching their best picks, we have figured out a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as important, optimistic insider trading activity is another way to break down the marketplace. There are lots of stimuli for an executive to cut shares of his or her company, but only one, very obvious reason why they would buy. Many empirical studies have demonstrated the useful potential of this tactic if you understand what to do (learn more here).
With all of this in mind, let’s take a glance at the recent action encompassing TMS International Corp. (NYSE:TMS).
How have hedgies been trading TMS International Corp. (NYSE:TMS)?
Heading into 2013, a total of 9 of the hedge funds we track were bullish in this stock, a change of 50% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, Howard Marks’s Oaktree Capital Management had the most valuable position in TMS International Corp. (NYSE:TMS), worth close to $13.7 million, accounting for 0.3% of its total 13F portfolio. On Oaktree Capital Management’s heels is Archer Capital Management, managed by Eric Edidin and Josh Lobel, which held a $6.1 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Bill Miller’s Legg Mason Capital Management, Alexander Mitchell’s Scopus Asset Management and Chuck Royce’s Royce & Associates.
As industrywide interest jumped, specific money managers have been driving this bullishness. Oaktree Capital Management, managed by Howard Marks, established the largest position in TMS International Corp. (NYSE:TMS). Oaktree Capital Management had 13.7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $1.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Mike Vranos’s Ellington, and Richard Driehaus’s Driehaus Capital.
What do corporate executives and insiders think about TMS International Corp. (NYSE:TMS)?
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last half-year time frame, TMS International Corp. (NYSE:TMS) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to TMS International Corp. (NYSE:TMS). These stocks are Thermon Group Holdings Inc (NYSE:THR), The Gorman-Rupp Company (NYSEAMEX:GRC), John Bean Technologies Corporation (NYSE:JBT), and China Yuchai International Limited (NYSE:CYD). All of these stocks are in the diversified machinery industry and their market caps resemble TMS’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Thermon Group Holdings Inc (NYSE:THR)||6||1||4|
|The Gorman-Rupp Company (NYSEAMEX:GRC)||2||0||1|
|John Bean Technologies Corporation (NYSE:JBT)||12||0||4|
|China Yuchai International Limited (NYSE:CYD)||6||0||0|
With the results demonstrated by Insider Monkey’s research, retail investors should always keep an eye on hedge fund and insider trading activity, and TMS International Corp. (NYSE:TMS) applies perfectly to this mantra.