3M Co (NYSE:MMM) was in 37 hedge funds’ portfolio at the end of the first quarter of 2013. MMM has experienced an increase in enthusiasm from smart money of late. There were 36 hedge funds in our database with MMM positions at the end of the previous quarter.
According to most market participants, hedge funds are assumed to be underperforming, outdated financial tools of yesteryear. While there are over 8000 funds in operation at present, we choose to focus on the upper echelon of this group, about 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing equity investments, we have revealed a few investment strategies that have historically outperformed 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as important, optimistic insider trading sentiment is another way to parse down the world of equities. As the old adage goes: there are lots of motivations for a bullish insider to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if shareholders understand what to do (learn more here).
Consequently, it’s important to take a gander at the latest action regarding 3M Co (NYSE:MMM).
How have hedgies been trading 3M Co (NYSE:MMM)?
In preparation for this quarter, a total of 37 of the hedge funds we track were bullish in this stock, a change of 3% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.
Of the funds we track, Jean-Marie Eveillard’s First Eagle Investment Management had the biggest position in 3M Co (NYSE:MMM), worth close to $609.7 million, accounting for 2% of its total 13F portfolio. The second largest stake is held by Boykin Curry of Eagle Capital Management, with a $433.4 million position; 2.6% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Edgar Wachenheim’s Greenhaven Associates, Ric Dillon’s Diamond Hill Capital and Ken Griffin’s Citadel Investment Group.
Now, key money managers were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in 3M Co (NYSE:MMM). Adage Capital Management had 20 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $15.3 million investment in the stock during the quarter. The other funds with brand new MMM positions are Bruce Kovner’s Caxton Associates LP, John Overdeck and David Siegel’s Two Sigma Advisors, and Ray Dalio’s Bridgewater Associates.
How have insiders been trading 3M Co (NYSE:MMM)?
Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past six months. Over the last six-month time frame, 3M Co (NYSE:MMM) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to 3M Co (NYSE:MMM). These stocks are Lydall, Inc. (NYSE:LDL), Global Eagle Acquisition Corp (NASDAQ:ENT), and Harbinger Group Inc (NYSE:HRG). This group of stocks are in the conglomerates industry and their market caps match MMM’s market cap.