Is A M Castle and Co (NYSE:CAS) a sound stock to buy now? The smart money is reducing their bets on the stock. The number of bullish hedge fund positions fell by 1 lately.
To most investors, hedge funds are viewed as underperforming, old financial vehicles of the past. While there are greater than 8000 funds trading today, we at Insider Monkey look at the leaders of this group, close to 450 funds. It is widely believed that this group oversees the lion’s share of the smart money’s total capital, and by paying attention to their highest performing investments, we have determined a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as integral, optimistic insider trading activity is a second way to parse down the world of equities. There are a variety of incentives for an executive to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this method if shareholders understand what to do (learn more here).
Now, it’s important to take a peek at the key action regarding A M Castle and Co (NYSE:CAS).
What does the smart money think about A M Castle and Co (NYSE:CAS)?
At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of -14% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly.
According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the most valuable position in A M Castle and Co (NYSE:CAS). Royce & Associates has a $18.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Fine Capital Partners, managed by Debra Fine, which held a $11.1 million position; 1.1% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Michael Price’s MFP Investors and Jim Simons’s Renaissance Technologies.
Due to the fact that A M Castle and Co (NYSE:CAS) has witnessed falling interest from the smart money, it’s easy to see that there exists a select few fund managers that elected to cut their full holdings last quarter. At the top of the heap, Jonathan Kolatch’s Redwood Capital Management said goodbye to the biggest position of the “upper crust” of funds we key on, totaling an estimated $1.8 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund said goodbye to about $0.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
What have insiders been doing with A M Castle and Co (NYSE:CAS)?
Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past six months. Over the latest six-month time period, A M Castle and Co (NYSE:CAS) has seen 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to A M Castle and Co (NYSE:CAS). These stocks are Graham Corporation (NYSEAMEX:GHM), Olympic Steel, Inc. (NASDAQ:ZEUS), Tower International Inc (NYSE:TOWR), Gulf Island Fabrication, Inc. (NASDAQ:GIFI), and Park-Ohio Holdings Corp. (NASDAQ:PKOH). This group of stocks are in the metal fabrication industry and their market caps are closest to CAS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Graham Corporation (NYSEAMEX:GHM) | 2 | 2 | 3 |
| Olympic Steel, Inc. (NASDAQ:ZEUS) | 5 | 3 | 0 |
| Tower International Inc (NYSE:TOWR) | 2 | 0 | 0 |
| Gulf Island Fabrication, Inc. (NASDAQ:GIFI) | 3 | 2 | 0 |
| Park-Ohio Holdings Corp. (NASDAQ:PKOH) | 4 | 2 | 5 |
With the results exhibited by the aforementioned studies, everyday investors must always watch hedge fund and insider trading activity, and A M Castle and Co (NYSE:CAS) is an important part of this process.
