Worthington Industries, Inc. (NYSE:WOR) jumped over 9% to as high as $30.97 per share today as the company reported profit and revenue in its fourth quarter which ended May 31 for the fiscal year 2015 that were higher than what analysts expected. According to the Columbus, Ohio-based company, net earnings for the fourth quarter was $28.9 million, or $0.44 per diluted share, on net sales of $846.0 million. This is down from the fourth quarter of the previous year, when the firm reported net earnings of $33.2 million, or $0.47 per diluted share, on net sales of $891.0 million. EPS was impacted by $6.5 million in charges, the company said, which reduced EPS by $0.08.
Without the charges, Worthington Industries would have had an EPS of $0.52 per share. Analysts expected the firm to report an EPS of $0.46 on net sales of $835.87 million, according to data from Thomson Reuters. For the full fiscal 2015 year, the company reported net earnings of $76.8 million, or $1.12 per diluted share, on net sales of $3.38 billion. Net sales were up 8%, or $257.8 million, from $3.13 billion last year. The firm has also announced a quarterly dividend of $0.19 per share, up $0.01 per share compared to the previous quarter. Aside from the beat for the fourth quarter and the increase in dividend, data from Insider Monkey reveals that there is an increase in hedge fund activity in Worthington Industries, Inc.
Insider Monkey tracks hedge fund activity and insider sentiment because most investors can’t outperform the stock market by individually picking stocks. Stock returns aren’t evenly distributed. A randomly picked stock has only a 35% to 45% chance (depending on the investment horizon) to outperform the market. There are a few exceptions, one of which is when it comes to purchases made by corporate insiders. Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012 and they have returned more than 144% over the ensuing 32 months, outperforming the S&P 500 Index by nearly 85 percentage points (read the details here). The trick is focusing only on the best small-cap stock picks of funds, not their large-cap stock picks which are extensively covered by analysts and followed by almost everybody.
In terms of insider sentiment about Worthington Industries, Inc. (NYSE:WOR), there were several purchase of shares by insiders in the first quarter. In transactions that all happened on January 15, Director John Blystone bought 10,000 shares, Director Michael Endres bought 40,000, Vice President of Mergers and Acquisitions Joseph Hayek bought 1,000 shares, Director Ozey Horton bought 1,000 shares and Director Mark Davis bought 3,000 shares. As for sales, President Geoffrey Gilmore sold 1,405 shares in April 13 and Director Sidney Ribeau sold 4,000 shares on April 16.
Keeping this in mind, we’re going to take a peek at the recent action encompassing Worthington Industries, Inc. (NYSE:WOR).
What have hedge funds been doing with Worthington Industries, Inc. (NYSE:WOR)?
By the end of March, a total of 10 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of 11% from one quarter earlier. Total value of holdings, however, decreased from $86.21 million in the previous quarter to $70.39 million by the end of the first quarter, a decrease of 18.35%. This decrease is, nonetheless, slightly offset by an 11.57% dip in the stock’s price from January 2 to March 31.
When looking at the hedgies followed by Insider Monkey, Chuck Royce‘s Royce & Associates had the largest position in Worthington Industries, Inc. (NYSE:WOR), worth close to $35.5 million in about 1.33 million shares, corresponding to 0.1% of its total 13F portfolio. On Royce & Associates’s heels is AQR Capital Management, managed by Cliff Asness, which held a $16.8 million position in 631,601 shares; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include David. E. Shaw’s D.E. Shaw & Co., L.P., Phill Gross and Robert Atchinson’s Adage Capital Management and Israel Englander’s Millennium Management.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the biggest position in Worthington Industries, Inc. (NYSE:WOR). Adage Capital Management had $4 million invested in 151,424 shares of the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.8 million investment in 65,866 shares during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Matthew Hulsizer’s PEAK6 Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.
Considering the company’s beat for the fourth quarter, the increase in dividend and increase in number of hedge funds which have long positions on the stock, we see Worthington Industries, Inc. (NYSE:WOR) as a stock to buy now.
Disclosure: None
