Is Esterline Technologies Corporation (ESL) Going to Burn These Hedge Funds?

Esterline Technologies Corporation (NYSE:ESL) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. ESL has experienced a decrease in support from the world’s most elite money managers in recent months. There were 19 hedge funds in our database with ESL holdings at the end of the previous quarter.

In the 21st century investor’s toolkit, there are many gauges investors can use to watch the equity markets. A pair of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a very impressive amount (see just how much).

Just as key, positive insider trading sentiment is another way to break down the investments you’re interested in. There are a number of stimuli for an insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this strategy if investors know what to do (learn more here).

With these “truths” under our belt, it’s important to take a look at the latest action encompassing Esterline Technologies Corporation (NYSE:ESL).

How have hedgies been trading Esterline Technologies Corporation (NYSE:ESL)?

In preparation for this quarter, a total of 15 of the hedge funds we track were long in this stock, a change of -21% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully.

Of the funds we track, Relational Investors, managed by Ralph V. Whitworth, holds the most valuable position in Esterline Technologies Corporation (NYSE:ESL). Relational Investors has a $177 million position in the stock, comprising 3.4% of its 13F portfolio. Coming in second is David Dreman of Dreman Value Management, with a $36.5 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, Ken Griffin’s Citadel Investment Group and Anand Parekh’s Alyeska Investment Group.

Because Esterline Technologies Corporation (NYSE:ESL) has experienced bearish sentiment from the smart money, we can see that there was a specific group of funds that slashed their positions entirely last quarter. Intriguingly, Clifton S. Robbins’s Blue Harbour Group cut the biggest stake of all the hedgies we track, totaling close to $31.3 million in stock.. Jim Simons’s fund, Renaissance Technologies, also sold off its stock, about $12.8 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.

How are insiders trading Esterline Technologies Corporation (NYSE:ESL)?

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has seen transactions within the past six months. Over the last six-month time period, Esterline Technologies Corporation (NYSE:ESL) has seen 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

With the returns exhibited by our studies, retail investors must always watch hedge fund and insider trading activity, and Esterline Technologies Corporation (NYSE:ESL) is an important part of this process.

Click here to learn why you should track hedge funds