Watsco Inc (WSO): Insiders Aren’t Crazy About It

Is Watsco Inc (NYSE:WSO) a cheap investment now? Prominent investors are betting on the stock. The number of bullish hedge fund bets increased by 1 recently.

In the financial world, there are plenty of gauges shareholders can use to track stocks. Some of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best money managers can outperform the market by a very impressive margin (see just how much).

Just as important, bullish insider trading sentiment is a second way to break down the marketplace. Obviously, there are plenty of incentives for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the market-beating potential of this tactic if shareholders understand what to do (learn more here).

Now, we’re going to take a glance at the key action surrounding Watsco Inc (NYSE:WSO).

How have hedgies been trading Watsco Inc (NYSE:WSO)?

In preparation for this year, a total of 5 of the hedge funds we track were long in this stock, a change of 25% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully.

According to our comprehensive database, Chuck Royce’s Royce & Associates had the largest position in Watsco Inc (NYSE:WSO), worth close to $18.1 million, comprising 0.1% of its total 13F portfolio. On Royce & Associates’s heels is Ken Grossman and Glen Schneider of SG Capital Management, with a $4.9 million position; 2.6% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Neil Chriss’s Hutchin Hill Capital, Ken Griffin’s Citadel Investment Group and J. Alan Reid, Jr.’s Forward Management.

As one would reasonably expect, key money managers have been driving this bullishness. SG Capital Management, managed by Ken Grossman and Glen Schneider, created the largest position in Watsco Inc (NYSE:WSO). SG Capital Management had 4.9 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $3.6 million position during the quarter. The only other fund with a brand new WSO position is J. Alan Reid, Jr.’s Forward Management.

What have insiders been doing with Watsco Inc (NYSE:WSO)?

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the last 180-day time frame, Watsco Inc (NYSE:WSO) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Watsco Inc (NYSE:WSO). These stocks are VOXX International Corp (NASDAQ:VOXX), Ituran Location and Control Ltd. (US) (NASDAQ:ITRN), Avnet, Inc. (NYSE:AVT), Arrow Electronics, Inc. (NYSE:ARW), and Anixter International Inc. (NYSE:AXE). This group of stocks belong to the electronics wholesale industry and their market caps are similar to WSO’s market cap.

With the returns demonstrated by the aforementioned research, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Watsco Inc (NYSE:WSO) shareholders fit into this picture quite nicely.

Click here to learn why you should track hedge funds