Should You Buy Mine Safety Appliances (MSA)?

Mine Safety Appliances (NYSE:MSA) has experienced an increase in hedge fund sentiment lately.

If you’d ask most traders, hedge funds are seen as worthless, outdated investment tools of yesteryear. While there are more than 8000 funds in operation today, we at Insider Monkey hone in on the upper echelon of this club, about 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total asset base, and by monitoring their top equity investments, we have discovered a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 (check out a sample of our picks).

Equally as important, bullish insider trading sentiment is another way to parse down the world of equities. Obviously, there are a number of stimuli for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this tactic if “monkeys” understand what to do (learn more here).

Consequently, it’s important to take a gander at the recent action regarding Mine Safety Appliances (NYSE:MSA).

Hedge fund activity in Mine Safety Appliances (NYSE:MSA)

Heading into Q2, a total of 17 of the hedge funds we track held long positions in this stock, a change of 89% from the first quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the biggest position in Mine Safety Appliances (NYSE:MSA), worth close to $27.9 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Private Capital Management, managed by Gregg J. Powers, which held a $10 million position; 1% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most outsized position in Mine Safety Appliances (NYSE:MSA). Two Sigma Advisors had 2.8 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1.4 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Matthew Tewksbury’s Stevens Capital Management, and Steven Cohen’s SAC Capital Advisors.

How are insiders trading Mine Safety Appliances (NYSE:MSA)?

Bullish insider trading is best served when the primary stock in question has seen transactions within the past half-year. Over the last six-month time frame, Mine Safety Appliances (NYSE:MSA) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Mine Safety Appliances (NYSE:MSA). These stocks are Cyberonics, Inc. (NASDAQ:CYBX), Globus Medical Inc (NYSE:GMED), Techne Corporation (NASDAQ:TECH), Opko Health Inc. (NYSE:OPK), and STERIS Corp (NYSE:STE). This group of stocks are in the medical appliances & equipment industry and their market caps are closest to MSA’s market cap.