Precision Castparts Corp. (PCP): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Precision Castparts Corp. (NYSE:PCP) investors should pay attention to an increase in support from the world’s most elite money managers in recent months.

To the average investor, there are dozens of metrics investors can use to analyze their holdings. A duo of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace their index-focused peers by a significant margin (see just how much).

Just as integral, bullish insider trading activity is another way to break down the stock market universe. Obviously, there are a number of incentives for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the recent action regarding Precision Castparts Corp. (NYSE:PCP).

How are hedge funds trading Precision Castparts Corp. (NYSE:PCP)?

Heading into Q2, a total of 29 of the hedge funds we track held long positions in this stock, a change of 7% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Warren Buffett’s Berkshire Hathaway had the largest position in Precision Castparts Corp. (NYSE:PCP), worth close to $374.9 million, comprising 0.4% of its total 13F portfolio. Coming in second is Bain Capital of Brookside Capital, with a $187.6 million position; the fund has 4.1% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Mario Gabelli’s GAMCO Investors, Ken Griffin’s Citadel Investment Group and Jeffrey Altman’s Owl Creek Asset Management.

Consequently, specific money managers were leading the bulls’ herd. Brookside Capital, managed by Bain Capital, established the most outsized position in Precision Castparts Corp. (NYSE:PCP). Brookside Capital had 187.6 million invested in the company at the end of the quarter. Jeffrey Altman’s Owl Creek Asset Management also initiated a $64.8 million position during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, Andrew Sandler’s Sandler Capital Management, and Jeffrey Vinik’s Vinik Asset Management.

How have insiders been trading Precision Castparts Corp. (NYSE:PCP)?

Insider buying is particularly usable when the company in focus has seen transactions within the past half-year. Over the last 180-day time frame, Precision Castparts Corp. (NYSE:PCP) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Precision Castparts Corp. (NYSE:PCP). These stocks are Chart Industries, Inc. (NASDAQ:GTLS), Carpenter Technology Corporation (NYSE:CRS), Allegheny Technologies Incorporated (NYSE:ATI), Valmont Industries, Inc. (NYSE:VMI), and Reliance Steel & Aluminum (NYSE:RS). This group of stocks are in the metal fabrication industry and their market caps are similar to PCP’s market cap.

With the results demonstrated by the aforementioned time-tested strategies, retail investors should always pay attention to hedge fund and insider trading activity, and Precision Castparts Corp. (NYSE:PCP) is an important part of this process.

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