Johnson Controls, Inc. (JCI): Hedge Funds and Insiders Are Bearish, What Should You Do?

Johnson Controls, Inc. (NYSE:JCI) shareholders have witnessed a decrease in support from the world’s most elite money managers of late.

At the moment, there are dozens of gauges market participants can use to track stocks. A couple of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best money managers can outperform the market by a significant amount (see just how much).

Just as beneficial, positive insider trading activity is another way to break down the financial markets. Obviously, there are a variety of reasons for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this tactic if you know where to look (learn more here).

Keeping this in mind, let’s take a peek at the recent action encompassing Johnson Controls, Inc. (NYSE:JCI).

What have hedge funds been doing with Johnson Controls, Inc. (NYSE:JCI)?

Heading into Q2, a total of 26 of the hedge funds we track held long positions in this stock, a change of -7% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly.

Of the funds we track, Sandy Nairn’s Edinburgh Partners had the largest position in Johnson Controls, Inc. (NYSE:JCI), worth close to $199.3 million, accounting for 12.1% of its total 13F portfolio. The second largest stake is held by Phill Gross and Robert Atchinson of Adage Capital Management, with a $191.2 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include D. E. Shaw’s D E Shaw, Eric Bannasch’s Cadian Capital and Ken Griffin’s Citadel Investment Group.

Seeing as Johnson Controls, Inc. (NYSE:JCI) has faced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds who sold off their full holdings at the end of the first quarter. Intriguingly, Jim Simons’s Renaissance Technologies sold off the biggest position of all the hedgies we watch, valued at an estimated $49.9 million in stock.. Michael Messner’s fund, Seminole Capital (Investment Mgmt), also sold off its stock, about $11.4 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds at the end of the first quarter.

How are insiders trading Johnson Controls, Inc. (NYSE:JCI)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has seen transactions within the past half-year. Over the last half-year time frame, Johnson Controls, Inc. (NYSE:JCI) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Johnson Controls, Inc. (NYSE:JCI). These stocks are LKQ Corporation (NASDAQ:LKQ), TRW Automotive Holdings Corp. (NYSE:TRW), Autoliv Inc. (NYSE:ALV), BorgWarner Inc. (NYSE:BWA), and Delphi Automotive PLC (NYSE:DLPH). This group of stocks are in the auto parts industry and their market caps resemble JCI’s market cap.