Is Dover Corp (NYSE:DOV) a good investment?
Now, according to many of your fellow readers, hedge funds are viewed as delayed, outdated financial tools of a period lost to current times. Although there are more than 8,000 hedge funds in operation in present day, Insider Monkey focuses on the aristocrats of this club, around 525 funds. It is assumed that this group has its hands on most of the smart money’s total assets, and by paying attention to their highest quality equity investments, we’ve spotted a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as crucial, optimistic insider trading activity is another way to analyze the world of equities. There are a number of reasons for an upper level exec to downsize shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).
Furthermore, it’s important to examine the recent info surrounding Dover Corp (NYSE:DOV).
What have hedge funds been doing with Dover Corp (NYSE:DOV)?
Heading into Q3, a total of 20 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes considerably.
Out of the hedge funds we follow, Harris Associates, managed by Natixis Global Asset Management, holds the largest position in Dover Corp (NYSE:DOV). Harris Associates has a $664 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Ric Dillon of Diamond Hill Capital, with a $192.2 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include David Harding’s Winton Capital Management, Michael Messner’s Seminole Capital (Investment Mgmt) and Matthew Tewksbury’s Stevens Capital Management.
Since Dover Corp (NYSE:DOV) has witnessed a fall in interest from the top-tier hedge fund industry, we can see that there were a few money managers who sold off their positions entirely heading into Q2. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors cut the largest stake of the 450+ funds we watch, worth an estimated $2.8 million in stock. Ray Dalio’s fund, Bridgewater Associates, also dumped its stock, about $1.6 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in Dover Corp (NYSE:DOV)
Insider buying is best served when the company in question has seen transactions within the past six months. Over the latest half-year time frame, Dover Corp (NYSE:DOV) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Dover Corp (NYSE:DOV). These stocks are Flowserve Corporation (NYSE:FLS), Kubota Corp (ADR) (NYSE:KUB), Ingersoll-Rand PLC (NYSE:IR), Pentair, Ltd. Registered Share (NYSE:PNR), and Roper Industries, Inc. (NYSE:ROP). All of these stocks are in the diversified machinery industry and their market caps are closest to DOV’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Flowserve Corporation (NYSE:FLS)||28||0||0|
|Kubota Corp (ADR) (NYSE:KUB)||6||0||0|
|Ingersoll-Rand PLC (NYSE:IR)||43||0||0|
|Pentair, Ltd. Registered Share (NYSE:PNR)||28||0||0|
|Roper Industries, Inc. (NYSE:ROP)||24||0||0|
Using the results explained by the previously mentioned studies, regular investors should always watch hedge fund and insider trading activity, and Dover Corp (NYSE:DOV) shareholders fit into this picture quite nicely.