What Hedge Funds Think About W.W. Grainger, Inc. (GWW)

Is W.W. Grainger, Inc. (NYSE:GWW) a buy?

In the eyes of many of your fellow readers, hedge funds are assumed to be bloated, outdated investment vehicles of a forgotten age. Although there are over 8,000 hedge funds with their doors open in present day, this site focuses on the upper echelon of this group, close to 525 funds. It is assumed that this group controls the lion’s share of the hedge fund industry’s total assets, and by keeping an eye on their highest performing stock picks, we’ve uncovered a few investment strategies that have historically outperformed 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 outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Just as necessary, positive insider trading sentiment is another way to analyze the world of equities. Obviously, there are plenty of stimuli for an executive to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).

Furthermore, it’s important to examine the newest info surrounding W.W. Grainger, Inc. (NYSE:GWW).

Hedge fund activity in W.W. Grainger, Inc. (NYSE:GWW)

In preparation for the third quarter, a total of 24 of the hedge funds we track were bullish in this stock, a change of -8% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially.

Out of the hedge funds we follow, Generation Investment Management, managed by David Blood and Al Gore, holds the most valuable position in W.W. Grainger, Inc. (NYSE:GWW). Generation Investment Management has a $142.4 million position in the stock, comprising 2.7% of its 13F portfolio. Coming in second is SAC Capital Advisors, managed by Steven Cohen, which held a $106.2 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, and Chuck Royce’s Royce & Associates.

As W.W. Grainger, Inc. (NYSE:GWW) has witnessed dropping sentiment from upper-tier hedge fund managers, we can see that there was a specific group of fund managers who sold off their positions entirely in Q1. Interestingly, Anand Parekh’s Alyeska Investment Group said goodbye to the largest stake of the “upper crust” of funds we watch, worth close to $27.4 million in stock, and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund said goodbye to about $10.4 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds in Q1.

What have insiders been doing with W.W. Grainger, Inc. (NYSE:GWW)?

Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the last 180-day time frame, W.W. Grainger, Inc. (NYSE:GWW) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to W.W. Grainger, Inc. (NYSE:GWW). These stocks are Wesco Aircraft Holdings Inc (NYSE:WAIR), Applied Industrial Technologies (NYSE:AIT), WESCO International, Inc. (NYSE:WCC), MSC Industrial Direct Co Inc (NYSE:MSM), and Airgas, Inc. (NYSE:ARG). This group of stocks are in the industrial equipment wholesale industry and their market caps resemble GWW’s market cap.

Using the returns explained by our research, regular investors should always pay attention to hedge fund and insider trading sentiment, and W.W. Grainger, Inc. (NYSE:GWW) is an important part of this process.

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