TransDigm Group Incorporated (NYSE:TDG) has experienced an increase in enthusiasm from smart money lately.
To most stock holders, hedge funds are viewed as worthless, old investment tools of yesteryear. While there are greater than 8000 funds trading at the moment, we look at the aristocrats of this group, about 450 funds. It is estimated that this group has its hands on most of all hedge funds’ total asset base, and by watching their highest performing stock picks, we have revealed a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as key, positive insider trading activity is another way to break down the investments you’re interested in. There are plenty of reasons for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this tactic if piggybackers understand where to look (learn more here).
With all of this in mind, it’s important to take a look at the latest action surrounding TransDigm Group Incorporated (NYSE:TDG).
Hedge fund activity in TransDigm Group Incorporated (NYSE:TDG)
At the end of the first quarter, a total of 39 of the hedge funds we track were long in this stock, a change of 11% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially.
Of the funds we track, Lone Pine Capital, managed by Stephen Mandel, holds the largest position in TransDigm Group Incorporated (NYSE:TDG). Lone Pine Capital has a $390.9 million position in the stock, comprising 2% of its 13F portfolio. The second largest stake is held by Alan Fournier of Pennant Capital Management, with a $336.7 million position; 6.5% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Bain Capital’s Brookside Capital, Daniel S. Och’s OZ Management and Robert Joseph Caruso’s Select Equity Group.
Now, specific money managers were leading the bulls’ herd. Signpost Capital, managed by Siddharth Thacker, initiated the most outsized position in TransDigm Group Incorporated (NYSE:TDG). Signpost Capital had 11.7 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $11.5 million position during the quarter. The other funds with brand new TDG positions are Alexander Mitchell’s Scopus Asset Management, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
What have insiders been doing with TransDigm Group Incorporated (NYSE:TDG)?
Insider purchases made by high-level executives is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the latest 180-day time period, TransDigm Group Incorporated (NYSE:TDG) has experienced 1 unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to TransDigm Group Incorporated (NYSE:TDG). These stocks are Triumph Group Inc (NYSE:TGI), B/E Aerospace Inc (NASDAQ:BEAV), Embraer SA (ADR) (NYSE:ERJ), Rockwell Collins, Inc. (NYSE:COL), and L-3 Communications Holdings, Inc. (NYSE:LLL). This group of stocks are in the aerospace/defense products & services industry and their market caps resemble TDG’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Triumph Group Inc (NYSE:TGI)||22||2||3|
|B/E Aerospace Inc (NASDAQ:BEAV)||35||0||9|
|Embraer SA (ADR) (NYSE:ERJ)||11||0||0|
|Rockwell Collins, Inc. (NYSE:COL)||19||0||12|
|L-3 Communications Holdings, Inc. (NYSE:LLL)||14||0||11|
With the results exhibited by the aforementioned tactics, everyday investors must always watch hedge fund and insider trading activity, and TransDigm Group Incorporated (NYSE:TDG) applies perfectly to this mantra.