Steelcase Inc. (SCS): Hedge Funds Aren’t Crazy About It, Insider Sentiment Unchanged

Now, according to many of your peers, hedge funds are viewed as useless, outdated financial tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey looks at the elite of this club, about 525 funds. It is assumed that this group oversees the majority of all hedge funds’ total capital, and by monitoring their highest performing picks, we’ve spotted a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced 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 33 percentage points in 11 months (explore the details and some picks here).

Equally as necessary, positive insider trading activity is another way to analyze the financial markets. There are plenty of reasons for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this method if investors understand what to do (learn more here).

What’s more, we’re going to study the recent info for Steelcase Inc. (NYSE:SCS).

How have hedgies been trading Steelcase Inc. (NYSE:SCS)?

At the end of the second quarter, a total of 13 of the hedge funds we track were long in this stock, a change of -24% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably.

When using filings from the hedgies we track, Cliff Asness’s AQR Capital Management had the largest position in Steelcase Inc. (NYSE:SCS), worth close to $10.2 million, comprising less than 0.1%% of its total 13F portfolio. On AQR Capital Management’s heels is John Brennan of Sirios Capital Management, with a $8.9 million position; 1.4% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

As Steelcase Inc. (NYSE:SCS) has witnessed declining interest from the top-tier hedge fund industry, it’s safe to say that there were a few funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Israel Englander’s Millennium Management cut the biggest position of all the hedgies we key on, comprising close to $7.8 million in stock. Mark Broach’s fund, Manatuck Hill Partners, also sold off its stock, about $5.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.

What do corporate executives and insiders think about Steelcase Inc. (NYSE:SCS)?

Insider buying is at its handiest when the primary stock in question has seen transactions within the past six months. Over the last half-year time period, Steelcase Inc. (NYSE:SCS) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Steelcase Inc. (NYSE:SCS). These stocks are Knoll Inc (NYSE:KNL), Pitney Bowes Inc. (NYSE:PBI), VeriFone Systems Inc (NYSE:PAY), HNI Corp (NYSE:HNI), and Herman Miller, Inc. (NASDAQ:MLHR). This group of stocks are the members of the business equipment industry and their market caps match SCS’s market cap.

Using the returns demonstrated by the previously mentioned strategies, average investors must always pay attention to hedge fund and insider trading sentiment, and Steelcase Inc. (NYSE:SCS) is no exception.

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