Are hedge funds right about Cummins Inc. (NYSE:CMI)?
To the average investor, there are tons of indicators shareholders can use to analyze their holdings. Some of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can outpace the S&P 500 by a very impressive margin (see just how much).
Just as useful, bullish insider trading activity is a second way to analyze the stock market universe. As the old adage goes: there are a number of incentives for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Many academic studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).
Furthermore, we’re going to analyze the recent info about Cummins Inc. (NYSE:CMI).
Hedge fund activity in Cummins Inc. (NYSE:CMI)
At Q2’s end, a total of 33 of the hedge funds we track held long positions in this stock, a change of -3% from one quarter earlier. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings significantly.
According to our 13F database, Natixis Global Asset Management’s Harris Associates had the largest position in Cummins Inc. (NYSE:CMI), worth close to $273.3 million, accounting for 0.6% of its total 13F portfolio. The second largest stake is held by Partner Fund Management, managed by Christopher Medlock James, which held a $186.4 million position; 3.9% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Donald Chiboucis’s Columbus Circle Investors and Glenn Russell Dubin’s Highbridge Capital Management.
Because Cummins Inc. (NYSE:CMI) has experienced dropping sentiment from the smart money’s best and brightest, it’s easy to see that there exists a select few money managers that elected to cut their entire stakes in Q1. At the top of the heap, John Murphy’s Alydar Capital dumped the largest stake of all the hedgies we track, worth about $26.1 million in stock. Wayne Cooperman’s fund, Cobalt Capital Management, also dumped its stock, about $9.3 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds in Q1.
What do corporate executives and insiders think about Cummins Inc. (NYSE:CMI)?
Insider buying is best served when the primary stock in question has experienced transactions within the past 180 days. Over the latest six-month time period, Cummins Inc. (NYSE:CMI) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Cummins Inc. (NYSE:CMI). These stocks are Roper Industries, Inc. (NYSE:ROP), Ingersoll-Rand PLC (NYSE:IR), Koninklijke Philips Electronics NV (ADR) (NYSE:PHG), Illinois Tool Works Inc. (NYSE:ITW), and Kubota Corp (ADR) (NYSE:KUB). This group of stocks are the members of the diversified machinery industry and their market caps resemble CMI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Roper Industries, Inc. (NYSE:ROP) | 24 | 0 | 3 |
| Ingersoll-Rand PLC (NYSE:IR) | 43 | 3 | 14 |
| Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) | 8 | 0 | 0 |
| Illinois Tool Works Inc. (NYSE:ITW) | 24 | 0 | 10 |
| Kubota Corp (ADR) (NYSE:KUB) | 6 | 0 | 0 |
Using the returns shown by our analyses, regular investors should always pay attention to hedge fund and insider trading sentiment, and Cummins Inc. (NYSE:CMI) is no exception.
