Wesco Aircraft Holdings Inc (WAIR): Hedge Funds Are Bullish and Insiders Are Undecided, What Should You Do?

In the eyes of many traders, hedge funds are seen as useless, old financial tools of a forgotten age. Although there are over 8,000 hedge funds in operation currently, Insider Monkey focuses on the top tier of this group, close to 525 funds. Analysts calculate that this group has its hands on most of all hedge funds’ total capital, and by keeping an eye on their highest quality stock picks, we’ve brought to light a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outstripped 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 trumped the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Just as key, positive insider trading activity is another way to look at the financial markets. As the old adage goes: there are a number of reasons for a bullish insider to get rid of shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this tactic if “monkeys” know what to do (learn more here).

Now that that’s out of the way, let’s examine the recent info surrounding Wesco Aircraft Holdings Inc (NYSE:WAIR).

How have hedgies been trading Wesco Aircraft Holdings Inc (NYSE:WAIR)?

In preparation for the third quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of 33% from one quarter earlier. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably.

According to our 13F database, David Abrams’s Abrams Capital Management had the most valuable position in Wesco Aircraft Holdings Inc (NYSE:WAIR), worth close to $167.6 million, comprising 9.7% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $49.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Charles Clough’s Clough Capital Partners, John Ku’s Manor Road Capital Partners and D. E. Shaw’s D E Shaw.

Now, particular hedge funds have jumped into Wesco Aircraft Holdings Inc (NYSE:WAIR) headfirst. Abrams Capital Management, managed by David Abrams, assembled the biggest position in Wesco Aircraft Holdings Inc (NYSE:WAIR). Abrams Capital Management had 167.6 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also initiated a $49.5 million position during the quarter. The other funds with brand new WAIR positions are Charles Clough’s Clough Capital Partners, John Ku’s Manor Road Capital Partners, and D. E. Shaw’s D E Shaw.

What do corporate executives and insiders think about Wesco Aircraft Holdings Inc (NYSE:WAIR)?

Insider buying made by high-level executives is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last half-year time frame, Wesco Aircraft Holdings Inc (NYSE:WAIR) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Wesco Aircraft Holdings Inc (NYSE:WAIR). These stocks are Newport Corporation (NASDAQ:NEWP), Susser Petroleum Partners LP (NYSE:SUSP), RTI International Metals, Inc. (NYSE:RTI), Applied Industrial Technologies (NYSE:AIT), and DXP Enterprises Inc (NASDAQ:DXPE). This group of stocks belong to the industrial equipment wholesale industry and their market caps are closest to WAIR’s market cap.

Using the results demonstrated by the previously mentioned research, average investors should always track hedge fund and insider trading sentiment, and Wesco Aircraft Holdings Inc (NYSE:WAIR) is an important part of this process.

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