Caterpillar Inc. (NYSE:CAT) was in 33 hedge funds’ portfolio at the end of December. CAT investors should pay attention to a decrease in support from the world’s most elite money managers of late. There were 37 hedge funds in our database with CAT holdings at the end of the previous quarter.
According to most shareholders, hedge funds are viewed as unimportant, outdated financial tools of years past. While there are over 8000 funds trading at the moment, we look at the masters of this club, close to 450 funds. It is estimated that this group oversees most of all hedge funds’ total capital, and by keeping an eye on their top picks, we have determined a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a 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 25 percentage points in 6.5 month (explore the details and some picks here).
Now, it’s important to take a glance at the recent action encompassing Caterpillar Inc. (NYSE:CAT).
What have hedge funds been doing with Caterpillar Inc. (NYSE:CAT)?
Heading into 2013, a total of 33 of the hedge funds we track held long positions in this stock, a change of -11% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably.
When looking at the hedgies we track, Michael Larson’s Bill & Melinda Gates Foundation Trust had the most valuable position in Caterpillar Inc. (NYSE:CAT), worth close to $919 million, comprising 5.5% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $120 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include D. E. Shaw’s D E Shaw, Phill Gross and Robert Atchinson’s Adage Capital Management and Donald Chiboucis’s Columbus Circle Investors.
Because Caterpillar Inc. (NYSE:CAT) has witnessed declining sentiment from the smart money, it’s easy to see that there is a sect of money managers that elected to cut their positions entirely heading into 2013. Intriguingly, John Murphy’s Alydar Capital dumped the largest position of the 450+ funds we monitor, comprising about $25 million in stock., and Peter J. Eichler Jr. of Aletheia Research and Management was right behind this move, as the fund sold off about $23 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds heading into 2013.
How have insiders been trading Caterpillar Inc. (NYSE:CAT)?
Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the latest 180-day time frame, Caterpillar Inc. (NYSE:CAT) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
With the returns demonstrated by Insider Monkey’s studies, everyday investors should always watch hedge fund and insider trading activity, and Caterpillar Inc. (NYSE:CAT) is an important part of this process.
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