Hedge Funds Are Buying Masco Corporation (MAS)

Masco Corporation (NYSE:MAS) was in 30 hedge funds’ portfolio at the end of the first quarter of 2013. MAS investors should pay attention to an increase in support from the world’s most elite money managers recently. There were 26 hedge funds in our database with MAS holdings at the end of the previous quarter.

To most traders, hedge funds are perceived as worthless, old financial tools of yesteryear. While there are over 8000 funds trading today, we look at the aristocrats of this club, around 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total capital, and by tracking their top equity investments, we have determined a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as important, positive insider trading sentiment is another way to parse down the financial markets. Obviously, there are many reasons for an executive to cut shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the useful potential of this tactic if investors understand what to do (learn more here).

Keeping this in mind, let’s take a look at the latest action regarding Masco Corporation (NYSE:MAS).

How are hedge funds trading Masco Corporation (NYSE:MAS)?

At Q1’s end, a total of 30 of the hedge funds we track held long positions in this stock, a change of 15% from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in Masco Corporation (NYSE:MAS). Pzena Investment Management has a $236.3 million position in the stock, comprising 1.7% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which held a $114 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Donald Chiboucis’s Columbus Circle Investors, David Tepper’s Appaloosa Management LP and Crispin Odey’s Odey Asset Management Group.

Now, key money managers have been driving this bullishness. Brigade Capital, managed by Don Morgan, established the biggest position in Masco Corporation (NYSE:MAS). Brigade Capital had 15.6 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $10.7 million investment in the stock during the quarter. The other funds with brand new MAS positions are Glenn Russell Dubin’s Highbridge Capital Management, Stanley Shopkorn and Douglas Day’s Hilltop Park Associates, and John Fichthorn’s Dialectic Capital Management.

What have insiders been doing with Masco Corporation (NYSE:MAS)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time period, Masco Corporation (NYSE:MAS) has seen 2 unique insiders buying, and 7 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Masco Corporation (NYSE:MAS). These stocks are Armstrong World Industries, Inc. (NYSE:AWI), Fastenal Company (NASDAQ:FAST), Martin Marietta Materials, Inc. (NYSE:MLM), Owens Corning (NYSE:OC), and Vulcan Materials Company (NYSE:VMC). All of these stocks are in the general building materials industry and their market caps resemble MAS’s market cap.

With the results exhibited by the aforementioned research, retail investors must always watch hedge fund and insider trading sentiment, and Masco Corporation (NYSE:MAS) is an important part of this process.

Click here to learn why you should track hedge funds