Do Hedge Funds and Insiders Love Metals USA Holdings Corp (MUSA)?

Is Metals USA Holdings Corp (NYSE:MUSA) a sound stock to buy now? The smart money is becoming more confident. The number of bullish hedge fund positions rose by 2 lately.

To most shareholders, hedge funds are assumed to be slow, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the aristocrats of this group, around 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total asset base, and by watching their top stock picks, we have determined a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as key, positive insider trading sentiment is another way to break down the investments you’re interested in. Obviously, there are plenty of stimuli for an executive to get rid of shares of his or her company, but just one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

Keeping this in mind, we’re going to take a glance at the latest action encompassing Metals USA Holdings Corp (NYSE:MUSA).

How are hedge funds trading Metals USA Holdings Corp (NYSE:MUSA)?

At the end of the first quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 25% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly.

According to our comprehensive database, D. E. Shaw’s D E Shaw had the most valuable position in Metals USA Holdings Corp (NYSE:MUSA), worth close to $15 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $13.8 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Robert Emil Zoellner’s Alpine Associates, Nancy Havens-Hasty’s Havens Advisors and Clint Carlson’s Carlson Capital.

Now, specific money managers were leading the bulls’ herd. Alpine Associates, managed by Robert Emil Zoellner, assembled the biggest position in Metals USA Holdings Corp (NYSE:MUSA). Alpine Associates had 9.5 million invested in the company at the end of the quarter. Nancy Havens-Hasty’s Havens Advisors also made a $4.9 million investment in the stock during the quarter. The following funds were also among the new MUSA investors: Clint Carlson’s Carlson Capital, Mario Gabelli’s GAMCO Investors, and Jim Simons’s Renaissance Technologies.

How are insiders trading Metals USA Holdings Corp (NYSE:MUSA)?

Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past half-year. Over the latest half-year time period, Metals USA Holdings Corp (NYSE:MUSA) has experienced zero 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 Metals USA Holdings Corp (NYSE:MUSA). These stocks are Harsco Corporation (NYSE:HSC), Commercial Metals Company (NYSE:CMC), AK Steel Holding Corporation (NYSE:AKS), SunCoke Energy, Inc (NYSE:SXC), and Gibraltar Industries Inc (NASDAQ:ROCK). This group of stocks belong to the steel & iron industry and their market caps match MUSA’s market cap.

With the returns demonstrated by the aforementioned research, retail investors must always watch hedge fund and insider trading sentiment, and Metals USA Holdings Corp (NYSE:MUSA) is an important part of this process.

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