Do Hedge Funds and Insiders Love Parker-Hannifin Corporation (PH)?

Is Parker-Hannifin Corporation (NYSE:PH) a good investment?

Now, according to many of your fellow readers, hedge funds are viewed as useless, old financial tools of a period lost to current times. Although there are more than 8,000 hedge funds trading today, Insider Monkey aim at the upper echelon of this group, around 525 funds. Analysts calculate that this group has its hands on the majority of all hedge funds’ total assets, and by keeping an eye on their best picks, we’ve discovered a few investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we‘ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as useful, bullish insider trading activity is another way to look at the marketplace. Obviously, there are a variety of motivations for an insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this method if piggybackers understand what to do (learn more here).

What’s more, we’re going to analyze the recent info about Parker-Hannifin Corporation (NYSE:PH).

What have hedge funds been doing with Parker-Hannifin Corporation (NYSE:PH)?

At the end of the second quarter, a total of 18 of the hedge funds we track held long positions in this stock, a change of -25% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.

According to our 13F database, Natixis Global Asset Management’s Harris Associates had the largest position in Parker-Hannifin Corporation (NYSE:PH), worth close to $587.7 million, comprising 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Richard S. Pzena of Pzena Investment Management, with a $228.5 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Ric Dillon’s Diamond Hill Capital, Bill Miller’s Legg Mason Capital Management and Cliff Asness’s AQR Capital Management.

As Parker-Hannifin Corporation (NYSE:PH) has faced a fall in interest from upper-tier hedge fund managers, it’s easy to see that there was a specific group of money managers that slashed their full holdings last quarter. It’s worth mentioning that Phill Gross and Robert Atchinson’s Adage Capital Management dumped the biggest investment of all the hedgies we track, worth about $74.4 million in stock, and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund sold off about $15.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds last quarter.

How are insiders trading Parker-Hannifin Corporation (NYSE:PH)?

Insider buying made by high-level executives is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last 180-day time frame, Parker-Hannifin Corporation (NYSE:PH) has seen zero unique insiders buying, and zero 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 Parker-Hannifin Corporation (NYSE:PH). These stocks are EnPro Industries, Inc. (NYSE:NPO), TriMas Corp (NASDAQ:TRS), Barnes Group Inc. (NYSE:B), Watts Water Technologies Inc (NYSE:WTS), and Emerson Electric Co. (NYSE:EMR). All of these stocks are in the industrial equipment & components industry and their market caps resemble PH’s market cap.

Using the returns demonstrated by the previously mentioned strategies, average investors should always pay attention to hedge fund and insider trading activity, and Parker-Hannifin Corporation (NYSE:PH) is no exception.

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