Is W.R. Grace & Co. (NYSE:GRA) a buy? Here’s some data you might’ve missed.
To many traders, hedge funds are seen as delayed, outdated financial tools of a forgotten age. Although there are over 8,000 hedge funds with their doors open currently, this site focuses on the bigwigs of this club, close to 525 funds. It is widely held that this group has its hands on the lion’s share of the hedge fund industry’s total capital, and by watching their best equity investments, we’ve brought to light a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed 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 topped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as key, positive insider trading activity is a second way to look at the stock market universe. There are many incentives for a bullish insider to sell 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 method if shareholders understand where to look (learn more here).
Keeping this in mind, let’s study the recent info about W.R. Grace & Co. (NYSE:GRA).
How are hedge funds trading W.R. Grace & Co. (NYSE:GRA)?
In preparation for the third quarter, a total of 49 of the hedge funds we track held long positions in this stock, a change of 7% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably.
As one would understandably expect, particular hedge funds were breaking ground themselves. Iridian Asset Management, managed by David Cohen and Harold Levy, initiated the most outsized position in W.R. Grace & Co. (NYSE:GRA). Iridian Asset Management had 299.9 million invested in the company at the end of the quarter. John Griffin’s Blue Ridge Capital also initiated a $252.1 million position during the quarter. The following funds were also among the new GRA investors: Stephen Mandel’s Lone Pine Capital, Richard Chilton’s Chilton Investment Company, and Chase Coleman and Feroz Dewan’s Tiger Global Management LLC.
What have insiders been doing with W.R. Grace & Co. (NYSE:GRA)?
Insider buying made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the last six-month time frame, W.R. Grace & Co. (NYSE:GRA) has experienced zero unique insiders buying, and 6 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 W.R. Grace & Co. (NYSE:GRA). These stocks are Rockwood Holdings, Inc. (NYSE:ROC), Westlake Chemical Corporation (NYSE:WLK), International Flavors & Fragrances Inc (NYSE:IFF), The Valspar Corporation (NYSE:VAL), and Albemarle Corporation (NYSE:ALB). All of these stocks are in the specialty chemicals industry and their market caps match GRA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Rockwood Holdings, Inc. (NYSE:ROC) | 31 | 0 | 2 |
| Westlake Chemical Corporation (NYSE:WLK) | 26 | 0 | 12 |
| International Flavors & Fragrances Inc (NYSE:IFF) | 17 | 0 | 6 |
| The Valspar Corporation (NYSE:VAL) | 25 | 1 | 1 |
| Albemarle Corporation (NYSE:ALB) | 14 | 0 | 2 |
Using the returns shown by Insider Monkey’s studies, regular investors must always track hedge fund and insider trading sentiment, and W.R. Grace & Co. (NYSE:GRA) is no exception.
