Here is What Hedge Funds Think About Emerson Electric Co. (EMR)

Emerson Electric Co. (NYSE:EMR) investors should be aware of a decrease in support from the world’s most elite money managers recently.

In the eyes of most traders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are over 8000 funds with their doors open at the moment, we look at the upper echelon of this group, close to 450 funds. It is estimated that this group oversees the majority of the hedge fund industry’s total asset base, and by paying attention to their top picks, we have determined a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as important, positive insider trading sentiment is another way to parse down the investments you’re interested in. There are a number of stimuli for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if piggybackers understand what to do (learn more here).

Now, we’re going to take a look at the recent action surrounding Emerson Electric Co. (NYSE:EMR).

What does the smart money think about Emerson Electric Co. (NYSE:EMR)?

At Q1’s end, a total of 31 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes considerably.

Of the funds we track, Legg Mason Capital Management, managed by Bill Miller, holds the biggest position in Emerson Electric Co. (NYSE:EMR). Legg Mason Capital Management has a $67.3 million position in the stock, comprising 1.2% of its 13F portfolio. Coming in second is Seminole Capital (Investment Mgmt), managed by Michael Messner, which held a $35.2 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Cliff Asness’s AQR Capital Management, Matthew Tewksbury’s Stevens Capital Management and Israel Englander’s Millennium Management.

Seeing as Emerson Electric Co. (NYSE:EMR) has faced falling interest from the smart money, it’s easy to see that there were a few hedge funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Ricky Sandler’s Eminence Capital dumped the largest position of the 450+ funds we watch, valued at an estimated $31.8 million in stock., and Phill Gross and Robert Atchinson of Adage Capital Management was right behind this move, as the fund said goodbye to about $24.1 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Emerson Electric Co. (NYSE:EMR)?

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time period, Emerson Electric Co. (NYSE:EMR) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Emerson Electric Co. (NYSE:EMR). These stocks are EnPro Industries, Inc. (NYSE:NPO), TriMas Corp (NASDAQ:TRS), Barnes Group Inc. (NYSE:B), Watts Water Technologies Inc (NYSE:WTS), and Parker-Hannifin Corporation (NYSE:PH). This group of stocks belong to the industrial equipment & components industry and their market caps match EMR’s market cap.

With the results exhibited by our research, retail investors should always keep an eye on hedge fund and insider trading activity, and Emerson Electric Co. (NYSE:EMR) is an important part of this process.

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