General Cable Corporation (BGC): Hedge Funds and Insiders Are Bearish, What Should You Do?

Is General Cable Corporation (NYSE:BGC) an outstanding investment today? Prominent investors are in a bearish mood. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience

In the financial world, there are dozens of metrics market participants can use to track Mr. Market. A duo of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can trounce the market by a very impressive amount (see just how much).

Equally as key, positive insider trading sentiment is a second way to break down the investments you’re interested in. There are lots of motivations for an upper level exec to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this tactic if you know what to do (learn more here).

With all of this in mind, it’s important to take a look at the recent action encompassing General Cable Corporation (NYSE:BGC).

What does the smart money think about General Cable Corporation (NYSE:BGC)?

Heading into Q2, a total of 21 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Cadian Capital, managed by Eric Bannasch, holds the largest position in General Cable Corporation (NYSE:BGC). Cadian Capital has a $181.1 million position in the stock, comprising 5% of its 13F portfolio. Coming in second is David Dreman of Dreman Value Management, with a $42.1 million position; 1.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Cliff Asness’s AQR Capital Management, Matthew Lindenbaum’s Basswood Capital and Paul Tudor Jones’s Tudor Investment Corp.

Because General Cable Corporation (NYSE:BGC) has experienced declining sentiment from the smart money, logic holds that there was a specific group of fund managers who were dropping their full holdings at the end of the first quarter. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp dropped the largest stake of the 450+ funds we key on, comprising about $0.9 million in call options, and Jacob Gottlieb of Visium Asset Management was right behind this move, as the fund cut about $0.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about General Cable Corporation (NYSE:BGC)?

Insider buying is most useful when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time frame, General Cable Corporation (NYSE:BGC) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to General Cable Corporation (NYSE:BGC). These stocks are Woodward Inc (NASDAQ:WWD), Littelfuse, Inc. (NASDAQ:LFUS), Franklin Electric Co. (NASDAQ:FELE), Belden Inc. (NYSE:BDC), and EnerSys (NYSE:ENS). This group of stocks are in the industrial electrical equipment industry and their market caps resemble BGC’s market cap.

With the results demonstrated by our studies, everyday investors must always keep an eye on hedge fund and insider trading activity, and General Cable Corporation (NYSE:BGC) applies perfectly to this mantra.

Click here to learn why you should track hedge funds