Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) investors should pay attention to a decrease in hedge fund sentiment in recent months.
In the financial world, there are a multitude of methods market participants can use to track stocks. Two of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best money managers can trounce the broader indices by a superb margin (see just how much).
Equally as integral, bullish insider trading activity is a second way to break down the marketplace. As the old adage goes: there are many reasons for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this method if “monkeys” know what to do (learn more here).
Keeping this in mind, let’s take a look at the key action encompassing Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS).
How have hedgies been trading Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS)?
At the end of the fourth quarter, a total of 7 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably.
According to our comprehensive database, Israel Englander’s Millennium Management had the largest position in Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), worth close to $10.6 million, comprising 0.1% of its total 13F portfolio. Coming in second is Nelson Obus of Wynnefield Capital, with a $10.4 million position; the fund has 3.6% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Jim Simons’s Renaissance Technologies.
Seeing as Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few money managers that decided to sell off their entire stakes at the end of the year. It’s worth mentioning that Brett Hendrickson’s Nokomis Capital said goodbye to the biggest investment of all the hedgies we watch, totaling an estimated $5.7 million in stock. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS)?
Bullish insider trading is particularly usable when the company in focus has seen transactions within the past half-year. Over the latest 180-day time frame, Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) has seen 5 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS). These stocks are Ascent Capital Group Inc (NASDAQ:ASCMA), Napco Security Technologies Inc (NASDAQ:NSSC), Checkpoint Systems, Inc. (NYSE:CKP), CompX International Inc. (NYSEAMEX:CIX), and American Science & Engineering, Inc. (NASDAQ:ASEI). This group of stocks are the members of the security & protection services industry and their market caps are closest to KTOS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Ascent Capital Group Inc (NASDAQ:ASCMA) | 17 | 1 | 1 |
| Napco Security Technologies Inc (NASDAQ:NSSC) | 1 | 0 | 1 |
| Checkpoint Systems, Inc. (NYSE:CKP) | 11 | 3 | 0 |
| CompX International Inc. (NYSEAMEX:CIX) | 2 | 0 | 0 |
| American Science & Engineering, Inc. (NASDAQ:ASEI) | 8 | 0 | 4 |
With the returns demonstrated by our tactics, retail investors should always keep an eye on hedge fund and insider trading activity, and Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) is no exception.
