Should You Avoid Carpenter Technology Corporation (CRS)?

To the average investor, there are many metrics market participants can use to track Mr. Market. Some of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best fund managers can outpace the broader indices by a very impressive amount (see just how much).

Equally as useful, bullish insider trading activity is another way to look at the marketplace. As the old adage goes: there are many incentives for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the useful potential of this tactic if piggybackers understand what to do (learn more here).

Now that that’s out of the way, it’s important to analyze the latest info for Carpenter Technology Corporation (NYSE:CRS).

What have hedge funds been doing with Carpenter Technology Corporation (NYSE:CRS)?

In preparation for the third quarter, a total of 8 of the hedge funds we track were long in this stock, a change of -27% from the first quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully.

Out of the hedge funds we follow, Chuck Royce’s Royce & Associates had the largest position in Carpenter Technology Corporation (NYSE:CRS), worth close to $36.9 million, comprising 0.1% of its total 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $4.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Israel Englander’s Millennium Management, John Burbank’s Passport Capital and Matthew Tewksbury’s Stevens Capital Management.

Judging by the fact that Carpenter Technology Corporation (NYSE:CRS) has witnessed dropping sentiment from the entirety of the hedge funds we track, logic holds that there were a few money managers who sold off their full holdings in Q1. At the top of the heap, Richard Driehaus’s Driehaus Capital dumped the biggest stake of the 450+ funds we monitor, worth close to $8.9 million in stock. Clint Carlson’s fund, Carlson Capital, also dumped its stock, about $7.7 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds in Q1.

What have insiders been doing with Carpenter Technology Corporation (NYSE:CRS)?

Legal insider trading, particularly when it’s bullish, is most useful when the company in question has seen transactions within the past six months. Over the latest 180-day time frame, Carpenter Technology Corporation (NYSE:CRS) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Carpenter Technology Corporation (NYSE:CRS). These stocks are Valmont Industries, Inc. (NYSE:VMI), Allegheny Technologies Incorporated (NYSE:ATI), Sims Metal Management Ltd (ADR) (NYSE:SMS), Worthington Industries, Inc. (NYSE:WOR), and Chart Industries, Inc. (NASDAQ:GTLS). This group of stocks belong to the metal fabrication industry and their market caps resemble CRS’s market cap.