Is Reliance Steel & Aluminum (NYSE:RS) a good investment?
At the moment, there are plenty of gauges investors can use to watch their holdings. Some of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top fund managers can trounce the market by a solid amount (see just how much).
Equally as necessary, bullish insider trading activity is another way to analyze the financial markets. Just as you’d expect, there are many incentives for an executive to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if shareholders know what to do (learn more here).
Now that that’s out of the way, it’s important to analyze the recent info surrounding Reliance Steel & Aluminum (NYSE:RS).
Hedge fund activity in Reliance Steel & Aluminum (NYSE:RS)
In preparation for the third quarter, a total of 20 of the hedge funds we track were long in this stock, a change of -5% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially.
When using filings from the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in Reliance Steel & Aluminum (NYSE:RS), worth close to $365.9 million, comprising 1.1% of its total 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $110.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Cliff Asness’s AQR Capital Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and Steven Cohen’s SAC Capital Advisors.
Because Reliance Steel & Aluminum (NYSE:RS) has experienced a fall in interest from upper-tier hedge fund managers, it’s easy to see that there was a specific group of money managers that elected to cut their entire stakes last quarter. Interestingly, Jorge Paulo Lemann’s 3G Capital said goodbye to the biggest investment of the “upper crust” of funds we monitor, comprising close to $7.1 million in stock. Dwight Anderson’s fund, Ospraie Management, also cut its stock, about $2.2 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds last quarter.
What have insiders been doing with Reliance Steel & Aluminum (NYSE:RS)?
Legal insider trading, particularly when it’s bullish, is best served when the primary stock in question has experienced transactions within the past six months. Over the last half-year time period, Reliance Steel & Aluminum (NYSE:RS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Reliance Steel & Aluminum (NYSE:RS). These stocks are Worthington Industries, Inc. (NYSE:WOR), Chart Industries, Inc. (NASDAQ:GTLS), Carpenter Technology Corporation (NYSE:CRS), Allegheny Technologies Incorporated (NYSE:ATI), and Valmont Industries, Inc. (NYSE:VMI). All of these stocks are in the metal fabrication industry and their market caps are similar to RS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Worthington Industries, Inc. (NYSE:WOR) | 16 | 0 | 0 |
| Chart Industries, Inc. (NASDAQ:GTLS) | 15 | 0 | 0 |
| Carpenter Technology Corporation (NYSE:CRS) | 8 | 0 | 0 |
| Allegheny Technologies Incorporated (NYSE:ATI) | 23 | 0 | 0 |
| Valmont Industries, Inc. (NYSE:VMI) | 22 | 0 | 0 |
Using the results shown by our analyses, regular investors should always watch hedge fund and insider trading sentiment, and Reliance Steel & Aluminum (NYSE:RS) is an important part of this process.
