If you were to ask many market players, hedge funds are viewed as useless, old investment vehicles of a period lost to current times. Although there are over 8,000 hedge funds trading currently, this site aim at the aristocrats of this club, about 525 funds. It is widely held that this group controls the lion’s share of the smart money’s total assets, and by paying attention to their highest performing picks, we’ve spotted a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 topped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as necessary, optimistic insider trading activity is a second way to analyze the investments you’re interested in. Just as you’d expect, there are plenty of incentives for an upper level exec to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).
Furthermore, it’s important to analyze the latest info surrounding Kennametal Inc. (NYSE:KMT).
What does the smart money think about Kennametal Inc. (NYSE:KMT)?
In preparation for the third quarter, a total of 19 of the hedge funds we track were long in this stock, a change of 27% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully.
According to our 13F database, Chuck Royce’s Royce & Associates had the most valuable position in Kennametal Inc. (NYSE:KMT), worth close to $176.8 million, accounting for 0.5% of its total 13F portfolio. On Royce & Associates’s heels is Natixis Global Asset Management of Harris Associates, with a $112.7 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Martin Whitman’s Third Avenue Management, Ric Dillon’s Diamond Hill Capital and David Keidan’s Buckingham Capital Management.
As industrywide interest increased, particular hedge funds have jumped into Kennametal Inc. (NYSE:KMT) headfirst. Royce & Associates, managed by Chuck Royce, created the most outsized position in Kennametal Inc. (NYSE:KMT). Royce & Associates had 176.8 million invested in the company at the end of the quarter. Martin Whitman’s Third Avenue Management also initiated a $43.7 million position during the quarter. The other funds with new positions in the stock are Ric Dillon’s Diamond Hill Capital, David Keidan’s Buckingham Capital Management, and Israel Englander’s Millennium Management.
What have insiders been doing with Kennametal Inc. (NYSE:KMT)?
Insider buying is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest 180-day time frame, Kennametal Inc. (NYSE:KMT) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Kennametal Inc. (NYSE:KMT). These stocks are Kaydon Corporation (NYSE:KDN), RBC Bearings Incorporated (NASDAQ:ROLL), Proto Labs Inc (NYSE:PRLB), The Timken Company (NYSE:TKR), and MRC Global Inc (NYSE:MRC). This group of stocks belong to the machine tools & accessories industry and their market caps match KMT’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Kaydon Corporation (NYSE:KDN) | 12 | 0 | 0 |
| RBC Bearings Incorporated (NASDAQ:ROLL) | 9 | 0 | 0 |
| Proto Labs Inc (NYSE:PRLB) | 12 | 0 | 0 |
| The Timken Company (NYSE:TKR) | 25 | 0 | 0 |
| MRC Global Inc (NYSE:MRC) | 22 | 0 | 0 |
Using the returns shown by Insider Monkey’s tactics, regular investors should always track hedge fund and insider trading sentiment, and Kennametal Inc. (NYSE:KMT) shareholders fit into this picture quite nicely.
