Hedge Funds Are Crazy About Watsco Inc (WSO)

Watsco Inc (NYSE:WSO) was in 14 hedge funds’ portfolio at the end of March. WSO investors should be aware of an increase in enthusiasm from smart money in recent months. There were 6 hedge funds in our database with WSO holdings at the end of the previous quarter.

According to most market participants, hedge funds are assumed to be unimportant, old financial tools of yesteryear. While there are more than 8000 funds in operation today, we hone in on the masters of this group, close to 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total capital, and by keeping an eye on their top investments, we have found a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as integral, optimistic insider trading sentiment is another way to break down the stock market universe. Just as you’d expect, there are a variety of stimuli 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 empirical studies have demonstrated the useful potential of this strategy if “monkeys” understand what to do (learn more here).

Consequently, it’s important to take a peek at the key action regarding Watsco Inc (NYSE:WSO).

Hedge fund activity in Watsco Inc (NYSE:WSO)

In preparation for this quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 133% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially.

5 Small-Caps with More than 10 Years of Dividend GrowthWhen looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the largest position in Watsco Inc (NYSE:WSO). Royce & Associates has a $17.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Alexander Mitchell of Scopus Asset Management, with a $8.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Ken Grossman and Glen Schneider’s SG Capital Management and Israel Englander’s Millennium Management.

As aggregate interest increased, key hedge funds were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, initiated the largest position in Watsco Inc (NYSE:WSO). Scopus Asset Management had 8.8 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $8.4 million position during the quarter. The following funds were also among the new WSO investors: Israel Englander’s Millennium Management, Steven Cohen’s SAC Capital Advisors, and Jim Simons’s Renaissance Technologies.

How are insiders trading Watsco Inc (NYSE:WSO)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest six-month time period, Watsco Inc (NYSE:WSO) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Watsco Inc (NYSE:WSO). These stocks are VOXX International Corp (NASDAQ:VOXX), Ituran Location and Control Ltd. (US) (NASDAQ:ITRN), Avnet, Inc. (NYSE:AVT), Arrow Electronics, Inc. (NYSE:ARW), and Anixter International Inc. (NYSE:AXE). This group of stocks are the members of the electronics wholesale industry and their market caps match WSO’s market cap.