Hedge Funds Are Crazy About Ingersoll-Rand PLC (IR)

If you were to ask many of your peers, hedge funds are viewed as overrated, outdated financial vehicles of an era lost to time. Although there are In excess of 8,000 hedge funds in operation currently, Insider Monkey looks at the upper echelon of this club, about 525 funds. It is assumed that this group has its hands on most of the smart money’s total capital, and by tracking their best stock picks, we’ve formulated a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Just as necessary, optimistic insider trading sentiment is another way to analyze the stock market universe. Just as you’d expect, there are many stimuli for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).

Thus, let’s study the recent info surrounding Ingersoll-Rand PLC (NYSE:IR).

What have hedge funds been doing with Ingersoll-Rand PLC (NYSE:IR)?

Heading into Q3, a total of 43 of the hedge funds we track held long positions in this stock, a change of 5% from the first quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially.

Ingersoll-Rand PLC (NYSE:IR)Out of the hedge funds we follow, Trian Partners, managed by Nelson Peltz, holds the largest position in Ingersoll-Rand PLC (NYSE:IR). Trian Partners has a $747.9 million position in the stock, comprising 14.7% of its 13F portfolio. The second largest stake is held by Ralph V. Whitworth of Relational Investors, with a $399.5 million position; the fund has 7.5% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Daniel S. Och’s OZ Management, D. E. Shaw’s D E Shaw and Rob Citrone’s Discovery Capital Management.

Now, particular hedge funds have jumped into Ingersoll-Rand PLC (NYSE:IR) headfirst. Trian Partners, managed by Nelson Peltz, initiated the most valuable position in Ingersoll-Rand PLC (NYSE:IR). Trian Partners had 747.9 million invested in the company at the end of the quarter. Ralph V. Whitworth’s Relational Investors also initiated a $399.5 million position during the quarter. The following funds were also among the new IR investors: Daniel S. Och’s OZ Management, D. E. Shaw’s D E Shaw, and Rob Citrone’s Discovery Capital Management.

Insider trading activity in Ingersoll-Rand PLC (NYSE:IR)

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time period, Ingersoll-Rand PLC (NYSE:IR) has seen 3 unique insiders purchasing, and 14 insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Ingersoll-Rand PLC (NYSE:IR). These stocks are Pentair, Ltd. Registered Share (NYSE:PNR), Cummins Inc. (NYSE:CMI), Dover Corp (NYSE:DOV), Roper Industries, Inc. (NYSE:ROP), and Kubota Corp (ADR) (NYSE:KUB). This group of stocks belong to the diversified machinery industry and their market caps are closest to IR’s market cap.