This Metric Says You Are Smart to Buy TRW Automotive Holdings Corp. (TRW)

TRW Automotive Holdings Corp. (NYSE:TRW) was in 33 hedge funds’ portfolio at the end of March. TRW has experienced an increase in activity from the world’s largest hedge funds of late. There were 28 hedge funds in our database with TRW positions at the end of the previous quarter.

In the 21st century investor’s toolkit, there are plenty of gauges market participants can use to track publicly traded companies. A couple of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best fund managers can beat the S&P 500 by a solid amount (see just how much).

Equally as integral, optimistic insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are a number of motivations for an executive to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this method if “monkeys” understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the key action surrounding TRW Automotive Holdings Corp. (NYSE:TRW).

How are hedge funds trading TRW Automotive Holdings Corp. (NYSE:TRW)?

Heading into Q2, a total of 33 of the hedge funds we track were bullish in this stock, a change of 18% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully.

When looking at the hedgies we track, Thomas E. Claugus’s GMT Capital had the largest position in TRW Automotive Holdings Corp. (NYSE:TRW), worth close to $137.7 million, comprising 3.1% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $108.6 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Glenn Russell Dubin’s Highbridge Capital Management, Cliff Asness’s AQR Capital Management and Alexander Mitchell’s Scopus Asset Management.

With a general bullishness amongst the heavyweights, key money managers have jumped into TRW Automotive Holdings Corp. (NYSE:TRW) headfirst. Scopus Asset Management, managed by Alexander Mitchell, assembled the biggest position in TRW Automotive Holdings Corp. (NYSE:TRW). Scopus Asset Management had 32.8 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $31.2 million investment in the stock during the quarter. The following funds were also among the new TRW investors: Jim Simons’s Renaissance Technologies, Malcolm Fairbairn’s Ascend Capital, and Curtis Schenker and Craig Effron’s Scoggin.

What do corporate executives and insiders think about TRW Automotive Holdings Corp. (NYSE:TRW)?

Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time frame, TRW Automotive Holdings Corp. (NYSE:TRW) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to TRW Automotive Holdings Corp. (NYSE:TRW). These stocks are Allison Transmission Holdings Inc (NYSE:ALSN), BorgWarner Inc. (NYSE:BWA), Lear Corporation (NYSE:LEA), LKQ Corporation (NASDAQ:LKQ), and Autoliv Inc. (NYSE:ALV). This group of stocks are in the auto parts industry and their market caps are similar to TRW’s market cap.