HEICO Corporation (HEI): Are Hedge Funds Right About This Stock? – Esterline Technologies Corporation (ESL), Huntington Ingalls Industries Inc (HII)

Is HEICO Corporation (NYSE:HEI) a worthy investment right now? The best stock pickers are taking a bullish view. The number of bullish hedge fund positions rose by 1 in recent months.

If you’d ask most traders, hedge funds are seen as underperforming, outdated investment tools of the past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the masters of this group, close to 450 funds. It is widely believed that this group oversees most of the smart money’s total asset base, and by monitoring their top investments, we have discovered a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat 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 24 percentage points in 7 months (see all of our picks from August).

Equally as key, optimistic insider trading activity is another way to parse down the world of equities. Obviously, there are many motivations for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this method if shareholders understand where to look (learn more here).

Now, let’s take a peek at the key action encompassing HEICO Corporation (NYSE:HEI).

What does the smart money think about HEICO Corporation (NYSE:HEI)?

At the end of the fourth quarter, a total of 11 of the hedge funds we track were long in this stock, a change of 10% from the third quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially.

When looking at the hedgies we track, Select Equity Group, managed by Robert Joseph Caruso, holds the largest position in HEICO Corporation (NYSE:HEI). Select Equity Group has a $91.7 million position in the stock, comprising 1.4% of its 13F portfolio. On Select Equity Group’s heels is Royce & Associates, managed by Chuck Royce, which held a $73.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Brian Bares’s Bares Capital Management and Bill Miller’s Legg Mason Capital Management.

Now, key money managers were leading the bulls’ herd. CQS Cayman LP, managed by Michael Hintze, created the biggest position in HEICO Corporation (NYSE:HEI). CQS Cayman LP had 2.6 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $1.8 million position during the quarter. The only other fund with a new position in the stock is Israel Englander’s Millennium Management.

What do corporate executives and insiders think about HEICO Corporation (NYSE:HEI)?

Insider purchases made by high-level executives is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time frame, HEICO Corporation (NYSE:HEI) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to HEICO Corporation (NYSE:HEI). These stocks are Huntington Ingalls Industries Inc (NYSE:HII), CAE, Inc. (USA) (NYSE:CAE), Alliant Techsystems Inc. (NYSE:ATK), and Esterline Technologies Corporation (NYSE:ESL). All of these stocks are in the aerospace/defense products & services industry and their market caps are closest to HEI’s market cap.