Shares of Magnetek Inc (NASDAQ:MAG) are up by over 53% in trading today as the producer of power supply systems for the material handling industry (among others) was bought by one of the leading producers of material handling products, McKinnon Corp. (NASDAQ:CMCO). Shares of McKinnon meanwhile are up slightly after briefly vaulting by nearly 10% earlier in the day. The $188.9 million deal will pay shareholders of Magnetek $50 per share in an all-cash transaction. Magnetek’s shares have vaulted to $49.50 in trading as a result, with seemingly little in the way to prevent the merger from being completed. McKinnon Corp. (NASDAQ:CMCO) believes numerous synergies will be unlocked through the deal, including being able to offer its customers a wider and more complete range of material handling solutions, and the ability to expose Magnetek’s technology through McKinnon’s vast network of sales channels. As of March 31 at least, there were few hedge funds in our database who stood to prosper from the deal, with Jim Simons’ Renaissance Technologies holding the largest position in Magnetek Inc (NASDAQ:MAG) within our database, and a relatively small one at that.
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish in McKinnon Corp., down by one from three months earlier. Meanwhile, just three funds had holdings in Magnetek as of the same period, also down by one from the end of 2014. In terms of capital invested by the funds in each stock, there was relatively little change over the course of the first quarter.
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Insider trading was relatively sparse in both companies in the first half of the year, with no activity taking place among Magnetek’s insiders, and only a handful of insider sales by McKinnon insiders. The largest was by VIP of Human Resources Richard Steinberg, who sold 8,647 shares on February 25.
Let’s take a closer look at the key smart money action surrounding Columbus McKinnon Corp. (NASDAQ:CMCO) and Magnetek Inc (NASDAQ:MAG).
What does the smart money think about Columbus McKinnon Corp. (NASDAQ:CMCO) and Magnetek Inc (NASDAQ:MAG)?
According to hedge fund intelligence website Insider Monkey, Richard S. Pzena‘s Pzena Investment Management had the largest position in Columbus McKinnon Corp. (NASDAQ:CMCO), worth close to $28.7 million, accounting for 0.2% of its total 13F portfolio. Sitting in the Number two spot was Chuck Royce of Royce & Associates, with a $19.9 million position; 0.1% of its 13F portfolio was allocated to the stock. Some other hedge funds that held long positions consist of Peter Schliemann’s Rutabaga Capital Management, Julian Allen’s Spitfire Capital, and Mark Lee’s Forest Hill Capital.
Interestingly, Royce’s mutual fund was the only one to have a position in both companies as of March 31 among the funds we track, and one of only three with positions in Magnetek. In addition to the aforementioned Simons’ $8.0 million position of 207,590 shares, and Royce’s holding of 182,883 shares, Mario Gabelli’s GAMCO Investors had a position of 136,446 shares. Thomas E. Lynch’s Mill Road Capital Management was the only fund to discard a former position in Magnetek, which had consisted of 14,404 shares.
Based on the data, we can see that hedge funds certainly didn’t appear to see anything big on the horizon for Magnatek, though they were somewhat bullish on Columbus McKinnon, given that they held about 15% of the company’s outstanding shares. Nonetheless, hedge funds mostly missed out on the consolidation activity taking place in the material handling industry today, much to their chagrin.
Disclosure: None
