This Metric Says You Are Smart to Sell Applied Industrial Technologies (AIT)

Should Applied Industrial Technologies (NYSE:AIT) investors track the following data?

In the eyes of many market players, hedge funds are perceived as overrated, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey focuses on the aristocrats of this club, about 525 funds. It is assumed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by keeping an eye on their highest quality investments, we’ve uncovered a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outperformed 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 the details here).

Equally as key, bullish insider trading activity is a second way to analyze the world of equities. There are many reasons for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this method if “monkeys” know where to look (learn more here).

Now that that’s out of the way, let’s analyze the latest info for Applied Industrial Technologies (NYSE:AIT).

How have hedgies been trading Applied Industrial Technologies (NYSE:AIT)?

At Q2’s end, a total of 8 of the hedge funds we track were bullish in this stock, a change of -27% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.

Applied Industrial Technologies (NYSE:AIT)When using filings from the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in Applied Industrial Technologies (NYSE:AIT), worth close to $239.6 million, comprising 0.7% of its total 13F portfolio. Sitting at the No. 2 spot is Charles de Vaulx of International Value Advisers, with a $36.6 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.

Due to the fact Applied Industrial Technologies (NYSE:AIT) has witnessed declining interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that decided to sell off their full holdings last quarter. It’s worth mentioning that Phill Gross and Robert Atchinson’s Adage Capital Management said goodbye to the largest position of all the hedgies we track, valued at about $6.9 million in stock, and Israel Englander of Catapult Capital Management was right behind this move, as the fund dumped about $1.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds last quarter.

What have insiders been doing with Applied Industrial Technologies (NYSE:AIT)?

Legal insider trading, particularly when it’s bullish, is particularly usable when the company in question has seen transactions within the past six months. Over the last half-year time period, Applied Industrial Technologies (NYSE:AIT) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Applied Industrial Technologies (NYSE:AIT). These stocks are Susser Petroleum Partners LP (NYSE:SUSP), RTI International Metals, Inc. (NYSE:RTI), DXP Enterprises Inc (NASDAQ:DXPE), WESCO International, Inc. (NYSE:WCC), and Wesco Aircraft Holdings Inc (NYSE:WAIR). This group of stocks are the members of the industrial equipment wholesale industry and their market caps are closest to AIT’s market cap.