Is Hillenbrand, Inc. (HI) Going to Burn These Hedge Funds?

Is Hillenbrand, Inc. (NYSE:HI) a good investment?

In the 21st century investor’s toolkit, there are a multitude of gauges investors can use to monitor Mr. Market. 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 best picks of the top money managers can outpace their index-focused peers by a solid margin (see just how much).

Equally as crucial, positive insider trading sentiment is a second way to analyze the stock market universe. Just as you’d expect, there are lots of stimuli for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this method if “monkeys” know what to do (learn more here).

Thus, let’s discuss the recent info surrounding Hillenbrand, Inc. (NYSE:HI).

What have hedge funds been doing with Hillenbrand, Inc. (NYSE:HI)?

Heading into Q3, a total of 11 of the hedge funds we track were bullish in this stock, a change of -8% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially.

When using filings from the hedgies we track, Diamond Hill Capital, managed by Ric Dillon, holds the largest position in Hillenbrand, Inc. (NYSE:HI). Diamond Hill Capital has a $21.5 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Dreman Value Management, managed by David Dreman, which held a $10 million position; 0.3% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Ken Griffin’s Citadel Investment Group, Chuck Royce’s Royce & Associates and D. E. Shaw’s D E Shaw.

Since Hillenbrand, Inc. (NYSE:HI) has experienced declining interest from upper-tier hedge fund managers, we can see that there is a sect of hedgies that elected to cut their entire stakes heading into Q2. Intriguingly, Matthew Hulsizer’s PEAK6 Capital Management sold off the largest stake of the “upper crust” of funds we watch, worth about $0.7 million in stock. David Costen Haley’s fund, HBK Investments, also cut its stock, about $0.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q2.

Insider trading activity in Hillenbrand, Inc. (NYSE:HI)

Legal insider trading, particularly when it’s bullish, is most useful when the company in question has seen transactions within the past half-year. Over the latest 180-day time period, Hillenbrand, Inc. (NYSE:HI) 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 Hillenbrand, Inc. (NYSE:HI). These stocks are Briggs & Stratton Corporation (NYSE:BGG), Rexnord Corp (NYSE:RXN), Polypore International, Inc. (NYSE:PPO), MKS Instruments, Inc. (NASDAQ:MKSI), and AIXTRON SE (ADR) (NASDAQ:AIXG). This group of stocks belong to the diversified machinery industry and their market caps are closest to HI’s market cap.