Xylem Inc (NYSE:XYL) was in 21 hedge funds’ portfolio at the end of the first quarter of 2013. XYL investors should be aware of a decrease in enthusiasm from smart money recently. There were 22 hedge funds in our database with XYL positions at the end of the previous quarter.
If you’d ask most traders, hedge funds are seen as unimportant, old financial tools of years past. While there are greater than 8000 funds trading today, we hone in on the moguls of this group, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the hedge fund industry’s total asset base, and by keeping an eye on their top investments, we have deciphered a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started 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 (check out a sample of our picks).
Equally as integral, optimistic insider trading activity is another way to break down the marketplace. There are a variety of incentives for a bullish insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this method if shareholders understand where to look (learn more here).
With all of this in mind, it’s important to take a peek at the key action regarding Xylem Inc (NYSE:XYL).
Hedge fund activity in Xylem Inc (NYSE:XYL)
Heading into Q2, a total of 21 of the hedge funds we track were long in this stock, a change of -5% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably.
Of the funds we track, Gates Capital Management, managed by Jeffrey Gates, holds the largest position in Xylem Inc (NYSE:XYL). Gates Capital Management has a $116.8 million position in the stock, comprising 6.1% of its 13F portfolio. On Gates Capital Management’s heels is Mario Gabelli of GAMCO Investors, with a $90.8 million position; 0.6% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include D. E. Shaw’s D E Shaw, Jim Simons’s Renaissance Technologies and George Soros’s Soros Fund Management.
Seeing as Xylem Inc (NYSE:XYL) has faced falling interest from hedge fund managers, logic holds that there exists a select few hedgies that slashed their entire stakes in Q1. At the top of the heap, Ian Simm’s Impax Asset Management sold off the biggest position of the “upper crust” of funds we watch, totaling an estimated $30.3 million in stock.. Gilchrist Berg’s fund, Water Street Capital, also cut its stock, about $10.5 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds in Q1.
Insider trading activity in Xylem Inc (NYSE:XYL)
Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the last six-month time frame, Xylem Inc (NYSE:XYL) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Xylem Inc (NYSE:XYL). These stocks are Avery Dennison Corp (NYSE:AVY), Colfax Corp (NYSE:CFX), IDEX Corporation (NYSE:IEX), Hubbell Incorporated (NYSE:HUB-B), and Dresser-Rand Group Inc. (NYSE:DRC). All of these stocks are in the diversified machinery industry and their market caps match XYL’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Avery Dennison Corp (NYSE:AVY)||18||0||8|
|Colfax Corp (NYSE:CFX)||26||1||2|
|IDEX Corporation (NYSE:IEX)||10||0||5|
|Hubbell Incorporated (NYSE:HUB-B)||20||0||0|
|Dresser-Rand Group Inc. (NYSE:DRC)||16||1||7|
With the results exhibited by our research, retail investors should always monitor hedge fund and insider trading sentiment, and Xylem Inc (NYSE:XYL) is no exception.