Ingersoll-Rand PLC (NYSE:IR) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months.
According to most shareholders, hedge funds are viewed as worthless, outdated investment tools of years past. While there are more than 8000 funds trading today, we choose to focus on the upper echelon of this club, close to 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total asset base, and by watching their top picks, we have come up with a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as beneficial, positive insider trading sentiment is another way to parse down the marketplace. There are plenty of stimuli for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this strategy if “monkeys” understand where to look (learn more here).
With all of this in mind, we’re going to take a look at the recent action encompassing Ingersoll-Rand PLC (NYSE:IR).
How have hedgies been trading Ingersoll-Rand PLC (NYSE:IR)?
Heading into 2013, a total of 30 of the hedge funds we track were bullish in this stock, a change of -6% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully.
When looking at the hedgies we track, Trian Partners, managed by Nelson Peltz, holds the most valuable position in Ingersoll-Rand PLC (NYSE:IR). Trian Partners has a $646 million position in the stock, comprising 27.3% of its 13F portfolio. On Trian Partners’s heels is Relational Investors, managed by Ralph V. Whitworth, which held a $546 million position; the fund has 10.5% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Jonathon Jacobson’s Highfields Capital Management, D. E. Shaw’s D E Shaw and Michael Karsch’s Karsch Capital Management.
Because Ingersoll-Rand PLC (NYSE:IR) has faced falling interest from hedge fund managers, we can see that there lies a certain “tier” of hedge funds that elected to cut their full holdings in Q4. At the top of the heap, Mason Hawkins’s Southeastern Asset Management said goodbye to the largest investment of all the hedgies we watch, totaling about $71 million in stock.. Matthew Lindenbaum’s fund, Basswood Capital, also dumped its stock, about $27 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in Q4.
What have insiders been doing with Ingersoll-Rand PLC (NYSE:IR)?
Insider buying is best served when the company in focus has seen transactions within the past 180 days. Over the latest half-year time period, Ingersoll-Rand PLC (NYSE:IR) has seen 1 unique insiders buying, and 13 insider sales (see the details of insider trades here).
With the returns exhibited by our time-tested strategies, retail investors must always monitor hedge fund and insider trading sentiment, and Ingersoll-Rand PLC (NYSE:IR) shareholders fit into this picture quite nicely.
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