Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is Kaman Corporation (NYSE:KAMN) the right pick for your portfolio? Prominent investors are buying. The number of long hedge fund positions advanced by 4 in recent months. Our calculations also showed that kamn isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Mario Gabelli of GAMCO Investors
Let’s check out the latest hedge fund action encompassing Kaman Corporation (NYSE:KAMN).
How are hedge funds trading Kaman Corporation (NYSE:KAMN)?
Heading into the fourth quarter of 2018, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2018. On the other hand, there were a total of 11 hedge funds with a bullish position in KAMN at the beginning of this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Mario Gabelli’s GAMCO Investors has the number one position in Kaman Corporation (NYSE:KAMN), worth close to $198.1 million, amounting to 1.3% of its total 13F portfolio. The second largest stake is held by Cardinal Capital, led by Amy Minella, holding a $59 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass John A. Levin’s Levin Capital Strategies, Noam Gottesman’s GLG Partners and Ken Griffin’s Citadel Investment Group.
As aggregate interest increased, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in Kaman Corporation (NYSE:KAMN). Marshall Wace LLP had $3.4 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments and Matthew Tewksbury’s Stevens Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Kaman Corporation (NYSE:KAMN) but similarly valued. We will take a look at Agree Realty Corporation (NYSE:ADC), Hortonworks Inc (NASDAQ:HDP), Power Integrations Inc (NASDAQ:POWI), and Berkshire Hills Bancorp, Inc. (NYSE:BHLB). This group of stocks’ market caps are similar to KAMN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADC | 14 | 71333 | 2 |
| HDP | 27 | 409365 | 3 |
| POWI | 9 | 97255 | 5 |
| BHLB | 8 | 38026 | 0 |
| Average | 14.5 | 153995 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $321 million in KAMN’s case. Hortonworks Inc (NASDAQ:HDP) is the most popular stock in this table. On the other hand Berkshire Hills Bancorp, Inc. (NYSE:BHLB) is the least popular one with only 8 bullish hedge fund positions. Kaman Corporation (NYSE:KAMN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HDP might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
