Is Lincoln Electric Holdings, Inc. (LECO) Going to Burn These Hedge Funds?

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Is Lincoln Electric Holdings, Inc. (NASDAQ:LECO) worth your attention right now? The smart money is taking an optimistic view. The number of long hedge fund positions inched up by 4 recently.

According to most stock holders, hedge funds are seen as unimportant, old financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we choose to focus on the crème de la crème of this group, around 450 funds. It is estimated that this group controls the lion’s share of all hedge funds’ total capital, and by tracking their top stock picks, we have identified a few investment strategies that have historically beaten 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as important, bullish insider trading activity is another way to parse down the financial markets. As the old adage goes: there are many stimuli for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this tactic if you understand what to do (learn more here).

With all of this in mind, we’re going to take a peek at the latest action encompassing Lincoln Electric Holdings, Inc. (NASDAQ:LECO).

Hedge fund activity in Lincoln Electric Holdings, Inc. (NASDAQ:LECO)

At the end of the first quarter, a total of 15 of the hedge funds we track were long in this stock, a change of 36% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.

Lincoln Electric Holdings, Inc. (NASDAQ:LECO)According to our comprehensive database, Chuck Royce’s Royce & Associates had the largest position in Lincoln Electric Holdings, Inc. (NASDAQ:LECO), worth close to $412.5 million, comprising 1.3% of its total 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, managed by Ken Fisher, which held a $62.1 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Jim Simons’s Renaissance Technologies and Joel Greenblatt’s Gotham Asset Management.

Consequently, some big names have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the biggest position in Lincoln Electric Holdings, Inc. (NASDAQ:LECO). Adage Capital Management had 24.3 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also made a $6.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, Robert Joseph Caruso’s Select Equity Group, and John Overdeck and David Siegel’s Two Sigma Advisors.

What do corporate executives and insiders think about Lincoln Electric Holdings, Inc. (NASDAQ:LECO)?

Bullish insider trading is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time frame, Lincoln Electric Holdings, Inc. (NASDAQ:LECO) has seen zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Lincoln Electric Holdings, Inc. (NASDAQ:LECO). These stocks are The Eastern Company (NASDAQ:EML), Simpson Manufacturing Co, Inc. (NYSE:SSD), The Toro Company (NYSE:TTC), Makita Corporation (ADR) (NASDAQ:MKTAY), and Snap-on Incorporated (NYSE:SNA). All of these stocks are in the small tools & accessories industry and their market caps match LECO’s market cap.

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