Exelis Inc (XLS): Insiders Aren’t Crazy About It But Hedge Funds Love It

Is Exelis Inc (NYSE:XLS) a buy?

At the moment, there are a multitude of metrics shareholders can use to analyze publicly traded companies. A pair of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite investment managers can trounce the broader indices by a superb amount (see just how much).

Equally as useful, optimistic insider trading sentiment is another way to look at the stock market universe. Obviously, there are a variety of reasons for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if shareholders understand where to look (learn more here).

Keeping this in mind, let’s discuss the recent info for Exelis Inc (NYSE:XLS).

What have hedge funds been doing with Exelis Inc (NYSE:XLS)?

In preparation for the third quarter, a total of 24 of the hedge funds we track were bullish in this stock, a change of 14% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.

Out of the hedge funds we follow, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Exelis Inc (NYSE:XLS). GAMCO Investors has a $27.4 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Alyeska Investment Group, managed by Anand Parekh, which held a $23 million position; 1.2% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include D. E. Shaw’s D E Shaw, Raymond J. Harbert’s Harbert Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

As one would understandably expect, certain bigger names were breaking ground themselves. GAMCO Investors, managed by Mario Gabelli, created the most outsized position in Exelis Inc (NYSE:XLS). GAMCO Investors had 27.4 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $23 million investment in the stock during the quarter. The following funds were also among the new XLS investors: D. E. Shaw’s D E Shaw, Raymond J. Harbert’s Harbert Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

What have insiders been doing with Exelis Inc (NYSE:XLS)?

Insider buying made by high-level executives is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest half-year time frame, Exelis Inc (NYSE:XLS) has seen zero unique insiders buying, 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 Exelis Inc (NYSE:XLS). These stocks are Alcatel Lucent SA (ADR) (NYSE:ALU), Ciena Corporation (NASDAQ:CIEN), ViaSat, Inc. (NASDAQ:VSAT), Arris Group, Inc. (NASDAQ:ARRS), and Acme Packet, Inc. (NASDAQ:APKT). This group of stocks are in the communication equipment industry and their market caps are similar to XLS’s market cap.

Using the results explained by our studies, average investors must always track hedge fund and insider trading activity, and Exelis Inc (NYSE:XLS) is an important part of this process.

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