Is Rockwell Automation (NYSE:ROK) worth your attention right now? Investors who are in the know are selling. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
If you’d ask most shareholders, hedge funds are viewed as unimportant, old financial vehicles of the past. While there are greater than 8000 funds in operation today, we at Insider Monkey look at the crème de la crème of this group, around 450 funds. It is widely believed that this group has its hands on most of the smart money’s total capital, and by paying attention to their best stock picks, we have unsheathed a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as important, bullish insider trading sentiment is another way to break down the financial markets. Obviously, there are many stimuli for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this tactic if investors understand what to do (learn more here).
Now, we’re going to take a glance at the latest action encompassing Rockwell Automation (NYSE:ROK).
How are hedge funds trading Rockwell Automation (NYSE:ROK)?
In preparation for this year, a total of 25 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, Partner Fund Management, managed by Christopher MedlockáJames, holds the largest position in Rockwell Automation (NYSE:ROK). Partner Fund Management has a $170 million position in the stock, comprising 7.2% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $80 million position; 1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include John A. Levin’s Levin Capital Strategies, Mario Gabelli’s GAMCO Investors and Ricky Sandler’s Eminence Capital.
Due to the fact that Rockwell Automation (NYSE:ROK) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies that elected to cut their positions entirely at the end of the year. It’s worth mentioning that James Dinan’s York Capital Management cut the biggest investment of all the hedgies we monitor, totaling about $58 million in stock.. Andrew Sandler’s fund, Sandler Capital Management, also cut its call options., about $28 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Rockwell Automation (NYSE:ROK)?
Insider buying is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time period, Rockwell Automation (NYSE:ROK) has experienced zero unique insiders buying, and 16 insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned research, retail investors must always monitor hedge fund and insider trading sentiment, and Rockwell Automation (NYSE:ROK) is an important part of this process.
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