W.R. Grace & Co. (NYSE:GRA) has seen an increase in hedge fund sentiment lately.
To most market participants, hedge funds are seen as slow, old investment vehicles of the past. While there are over 8000 funds in operation today, we choose to focus on the masters of this group, around 450 funds. It is widely believed that this group oversees most of the smart money’s total asset base, and by keeping an eye on their highest performing stock picks, we have deciphered a few 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as integral, positive insider trading activity is another way to break down the marketplace. There are many reasons for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if piggybackers understand where to look (learn more here).
Now, it’s important to take a glance at the recent action regarding W.R. Grace & Co. (NYSE:GRA).
How are hedge funds trading W.R. Grace & Co. (NYSE:GRA)?
Heading into Q2, a total of 46 of the hedge funds we track were long in this stock, a change of 10% from the first quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings substantially.
According to our comprehensive database, David Cohen and Harold Levy’s Iridian Asset Management had the largest position in W.R. Grace & Co. (NYSE:GRA), worth close to $278.8 million, accounting for 4.1% of its total 13F portfolio. Coming in second is John Griffin of Blue Ridge Capital, with a $232.5 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Richard Chilton’s Chilton Investment Company, Jonathan Auerbach’s Hound Partners and Daniel S. Och’s OZ Management.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Lone Pine Capital, managed by Stephen Mandel, created the most valuable position in W.R. Grace & Co. (NYSE:GRA). Lone Pine Capital had 115.8 million invested in the company at the end of the quarter. George Soros’s Soros Fund Management also made a $22.5 million investment in the stock during the quarter. The other funds with new positions in the stock are SAC Subsidiary’s CR Intrinsic Investors, James Pallotta’s Raptor Capital Management, and Mark Kingdon’s Kingdon Capital.
Insider trading activity in W.R. Grace & Co. (NYSE:GRA)
Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time period, W.R. Grace & Co. (NYSE:GRA) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to W.R. Grace & Co. (NYSE:GRA). These stocks are Rockwood Holdings, Inc. (NYSE:ROC), Westlake Chemical Corporation (NYSE:WLK), International Flavors & Fragrances Inc (NYSE:IFF), The Valspar Corporation (NYSE:VAL), and Albemarle Corporation (NYSE:ALB). This group of stocks are the members of the specialty chemicals industry and their market caps resemble GRA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Rockwood Holdings, Inc. (NYSE:ROC) | 34 | 0 | 4 |
| Westlake Chemical Corporation (NYSE:WLK) | 29 | 0 | 13 |
| International Flavors & Fragrances Inc (NYSE:IFF) | 18 | 0 | 5 |
| The Valspar Corporation (NYSE:VAL) | 18 | 1 | 3 |
| Albemarle Corporation (NYSE:ALB) | 17 | 0 | 2 |
With the returns demonstrated by our tactics, retail investors must always monitor hedge fund and insider trading activity, and W.R. Grace & Co. (NYSE:GRA) is no exception.
