Terex Corporation (TEX): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

Is Terex Corporation (NYSE:TEX) now a sell?

In today’s marketplace, there are a multitude of metrics shareholders can use to monitor publicly traded companies. A couple of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can outperform their index-focused peers by a solid margin (see just how much).

Just as crucial, bullish insider trading activity is another way to analyze the stock market universe. Obviously, there are plenty of stimuli for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).

Now that that’s out of the way, it’s important to examine the latest info surrounding Terex Corporation (NYSE:TEX).

What have hedge funds been doing with Terex Corporation (NYSE:TEX)?

Heading into Q3, a total of 22 of the hedge funds we track were long in this stock, a change of -27% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially.

Out of the hedge funds we follow, Alan Fournier’s Pennant Capital Management had the largest position in Terex Corporation (NYSE:TEX), worth close to $211.2 million, accounting for 3.9% of its total 13F portfolio. Coming in second is Relational Investors, managed by Ralph V. Whitworth, which held a $65.8 million position; 1.2% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include David Tepper’s Appaloosa Management LP, Sean Cullinan’s Point State Capital and Phill Gross and Robert Atchinson’s Adage Capital Management.

As Terex Corporation (NYSE:TEX) has witnessed dropping sentiment from the top-tier hedge fund industry, it’s easy to see that there was a specific group of fund managers that elected to cut their entire stakes in Q1. At the top of the heap, Robert Bishop’s Impala Asset Management dumped the largest position of the “upper crust” of funds we monitor, totaling close to $18.4 million in stock. Joe DiMenna’s fund, ZWEIG DIMENNA PARTNERS, also said goodbye to its stock, about $17.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 8 funds in Q1.

How have insiders been trading Terex Corporation (NYSE:TEX)?

Bullish insider trading is best served when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time period, Terex Corporation (NYSE:TEX) has seen 2 unique insiders purchasing, and 7 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 Terex Corporation (NYSE:TEX). These stocks are Lindsay Corporation (NYSE:LNN), CNH Global NV (ADR) (NYSE:CNH), Joy Global Inc. (NYSE:JOY), Manitowoc Company, Inc. (NYSE:MTW), and AGCO Corporation (NYSE:AGCO). This group of stocks are in the farm & construction machinery industry and their market caps are closest to TEX’s market cap.

Using the results explained by the previously mentioned strategies, regular investors must always track hedge fund and insider trading sentiment, and Terex Corporation (NYSE:TEX) applies perfectly to this mantra.

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