Is MSC Industrial Direct Co Inc (NYSE:MSM) a bargain? Money managers are getting more optimistic. The number of bullish hedge fund bets rose by 5 in recent months.
In the eyes of most shareholders, hedge funds are seen as unimportant, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the bigwigs of this club, close to 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total capital, and by monitoring their top picks, we have come up with a few investment strategies that have historically outpaced the 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 started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as important, optimistic insider trading sentiment is another way to break down the world of equities. As the old adage goes: there are many incentives for an executive to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this method if investors know where to look (learn more here).
Now, it’s important to take a peek at the key action encompassing MSC Industrial Direct Co Inc (NYSE:MSM).
How are hedge funds trading MSC Industrial Direct Co Inc (NYSE:MSM)?
In preparation for this year, a total of 17 of the hedge funds we track were long in this stock, a change of 42% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings substantially.
When looking at the hedgies we track, Robert Joseph Caruso’s Select Equity Group had the biggest position in MSC Industrial Direct Co Inc (NYSE:MSM), worth close to $164 million, accounting for 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $124 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Ken Fisher’s Fisher Asset Management, Richard Chilton’s Chilton Investment Company and Jim Simons’s Renaissance Technologies.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. CR Intrinsic Investors, managed by SAC Subsidiary, assembled the most outsized position in MSC Industrial Direct Co Inc (NYSE:MSM). CR Intrinsic Investors had 9 million invested in the company at the end of the quarter. Ken Gray and Steve Walsh’s Bryn Mawr Capital also made a $5 million investment in the stock during the quarter. The other funds with brand new MSM positions are Bruce Kovner’s Caxton Associates LP, Israel Englander’s Catapult Capital Management, and Jacob Gottlieb’s Visium Asset Management.
What have insiders been doing with MSC Industrial Direct Co Inc (NYSE:MSM)?
Bullish insider trading is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the latest six-month time frame, MSC Industrial Direct Co Inc (NYSE:MSM) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned strategies, retail investors should always keep an eye on hedge fund and insider trading sentiment, and MSC Industrial Direct Co Inc (NYSE:MSM) applies perfectly to this mantra.
Click here to learn more about Insider Monkey’s Hedge Fund Newsletter
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.
