Should You Avoid REGAL-BELOIT CORPORATION (RBC)?

REGAL-BELOIT CORPORATION (NYSE:RBC) investors should be aware of a decrease in support from the world’s most elite money managers of late.

To most investors, hedge funds are seen as underperforming, old investment tools of yesteryear. While there are greater than 8000 funds trading today, we at Insider Monkey choose to focus on the bigwigs of this club, around 450 funds. It is estimated that this group has its hands on the lion’s share of the smart money’s total asset base, and by monitoring their top equity investments, we have found a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as integral, positive insider trading activity is another way to break down the investments you’re interested in. Obviously, there are a variety of motivations for an executive to sell shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).

Keeping this in mind, let’s take a look at the latest action regarding REGAL-BELOIT CORPORATION (NYSE:RBC).

Hedge fund activity in REGAL-BELOIT CORPORATION (NYSE:RBC)

At Q1’s end, a total of 13 of the hedge funds we track were long in this stock, a change of -13% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially.

According to our comprehensive database, Chuck Royce’s Royce & Associates had the most valuable position in REGAL-BELOIT CORPORATION (NYSE:RBC), worth close to $46.7 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Fisher Asset Management, managed by Ken Fisher, which held a $44.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Mariko Gordon’s Daruma Asset Management.

Due to the fact that REGAL-BELOIT CORPORATION (NYSE:RBC) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of fund managers that decided to sell off their entire stakes heading into Q2. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the biggest stake of the “upper crust” of funds we key on, comprising an estimated $42.3 million in stock., and Ian Simm of Impax Asset Management was right behind this move, as the fund said goodbye to about $37 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q2.

How have insiders been trading REGAL-BELOIT CORPORATION (NYSE:RBC)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest half-year time period, REGAL-BELOIT CORPORATION (NYSE:RBC) has seen zero unique insiders purchasing, and 2 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 REGAL-BELOIT CORPORATION (NYSE:RBC). These stocks are General Cable Corporation (NYSE:BGC), EnerSys (NYSE:ENS), Belden Inc. (NYSE:BDC), Woodward Inc (NASDAQ:WWD), and A. O. Smith Corporation (NYSE:AOS). This group of stocks belong to the industrial electrical equipment industry and their market caps are closest to RBC’s market cap.