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Is AZZ Incorporated (AZZ) Going to Burn These Hedge Funds?

AZZ Incorporated (NYSE:AZZ) was in 16 hedge funds’ portfolio at the end of the first quarter of 2013. AZZ has experienced a decrease in hedge fund interest in recent months. There were 17 hedge funds in our database with AZZ positions at the end of the previous quarter.

To most market participants, hedge funds are perceived as worthless, old investment vehicles of the past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the bigwigs of this group, close to 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total asset base, and by monitoring their best picks, we have revealed a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

AZZ Incorporated (NYSE:AZZ)Equally as key, bullish insider trading activity is another way to break down the world of equities. Just as you’d expect, there are lots of motivations for an insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this method if piggybackers know what to do (learn more here).

Consequently, we’re going to take a look at the recent action regarding AZZ Incorporated (NYSE:AZZ).

What does the smart money think about AZZ Incorporated (NYSE:AZZ)?

At the end of the first quarter, a total of 16 of the hedge funds we track were bullish in this stock, a change of -6% from the first quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the biggest position in AZZ Incorporated (NYSE:AZZ), worth close to $103.4 million, comprising 0.3% of its total 13F portfolio. Coming in second is Sandler Capital Management, managed by Andrew Sandler, which held a $9.5 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Jim Simons’s Renaissance Technologies, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Judging by the fact that AZZ Incorporated (NYSE:AZZ) has experienced declining sentiment from hedge fund managers, it’s safe to say that there were a few fund managers that elected to cut their full holdings at the end of the first quarter. It’s worth mentioning that Robert B. Gillam’s McKinley Capital Management sold off the largest stake of all the hedgies we watch, comprising an estimated $2.1 million in stock., and John Overdeck and David Siegel of Two Sigma Advisors was right behind this move, as the fund cut about $0.7 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds at the end of the first quarter.

What have insiders been doing with AZZ Incorporated (NYSE:AZZ)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has experienced transactions within the past half-year. Over the latest half-year time frame, AZZ Incorporated (NYSE:AZZ) has experienced 1 unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to AZZ Incorporated (NYSE:AZZ). These stocks are Worthington Industries, Inc. (NYSE:WOR), Sims Metal Management Ltd (ADR) (NYSE:SMS), Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), Matthews International Corp (NASDAQ:MATW), and Mueller Industries, Inc. (NYSE:MLI). This group of stocks are in the metal fabrication industry and their market caps are closest to AZZ’s market cap.

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