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This Metric Says You Are Smart to Sell MSC Industrial Direct Co Inc (MSM)

Is MSC Industrial Direct Co Inc (NYSE:MSM) a buy, sell, or hold? Money managers are getting less bullish. The number of bullish hedge fund positions dropped by 3 recently.

In the 21st century investor’s toolkit, there are a multitude of indicators market participants can use to analyze Mr. Market. A pair of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can trounce the market by a healthy amount (see just how much).

Chuck RoyceEqually as integral, optimistic insider trading activity is a second way to break down the stock market universe. There are a variety of motivations for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this method if investors know where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the recent action regarding MSC Industrial Direct Co Inc (NYSE:MSM).

What does the smart money think about MSC Industrial Direct Co Inc (NYSE:MSM)?

At Q1’s end, a total of 14 of the hedge funds we track were bullish in this stock, a change of -18% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes meaningfully.

According to our comprehensive database, Robert Joseph Caruso’s Select Equity Group had the biggest position in MSC Industrial Direct Co Inc (NYSE:MSM), worth close to $177.7 million, accounting for 2.4% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $139.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Ken Fisher’s Fisher Asset Management, Steven Cohen’s SAC Capital Advisors and Richard Chilton’s Chilton Investment Company.

Because MSC Industrial Direct Co Inc (NYSE:MSM) has faced bearish sentiment from the smart money, logic holds that there exists a select few funds that decided to sell off their positions entirely at the end of the first quarter. Interestingly, Jim Simons’s Renaissance Technologies dumped the biggest stake of all the hedgies we track, totaling an estimated $18.8 million in stock., and Murray Stahl of Horizon Asset Management was right behind this move, as the fund dumped about $14.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 3 funds at the end of the first quarter.

What have insiders been doing with MSC Industrial Direct Co Inc (NYSE:MSM)?

Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past six months. Over the latest six-month time period, MSC Industrial Direct Co Inc (NYSE:MSM) has experienced zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to MSC Industrial Direct Co Inc (NYSE:MSM). These stocks are Wesco Aircraft Holdings Inc (NYSE:WAIR), W.W. Grainger, Inc. (NYSE:GWW), Applied Industrial Technologies (NYSE:AIT), WESCO International, Inc. (NYSE:WCC), and Airgas, Inc. (NYSE:ARG). This group of stocks belong to the industrial equipment wholesale industry and their market caps match MSM’s market cap.

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