Is Kaman Corporation (KAMN) Going to Burn These Hedge Funds?

Kaman Corporation (NYSE:KAMN) investors should be aware of an increase in enthusiasm from smart money of late.

If you’d ask most traders, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are over 8000 funds with their doors open at the moment, we choose to focus on the leaders of this group, close to 450 funds. It is estimated that this group has its hands on the lion’s share of the smart money’s total asset base, and by tracking their highest performing picks, we have spotted a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as beneficial, optimistic insider trading activity is another way to parse down the marketplace. Just as you’d expect, there are plenty of stimuli for a corporate insider to sell shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

Now, it’s important to take a look at the recent action regarding Kaman Corporation (NYSE:KAMN).

How have hedgies been trading Kaman Corporation (NYSE:KAMN)?

In preparation for this quarter, a total of 10 of the hedge funds we track were long in this stock, a change of 43% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes considerably.

According to our comprehensive database, Mario Gabelli’s GAMCO Investors had the largest position in Kaman Corporation (NYSE:KAMN), worth close to $98.4 million, accounting for 0.6% of its total 13F portfolio. Sitting at the No. 2 spot is Cardinal Capital, managed by Amy Minella, which held a $31.4 million position; the fund has 2% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management and Jim Simons’s Renaissance Technologies.

As aggregate interest increased, key hedge funds were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, initiated the most valuable position in Kaman Corporation (NYSE:KAMN). Renaissance Technologies had 2.1 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1 million position during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management and Matthew Tewksbury’s Stevens Capital Management.

How are insiders trading Kaman Corporation (NYSE:KAMN)?

Insider purchases made by high-level executives is at its handiest when the company in focus has experienced transactions within the past six months. Over the last 180-day time frame, Kaman Corporation (NYSE:KAMN) has experienced 2 unique insiders buying, and 1 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 Kaman Corporation (NYSE:KAMN). These stocks are Smith & Wesson Holding Corporation (NASDAQ:SWHC), AAR Corp. (NYSE:AIR), Orbital Sciences Corp (NYSE:ORB), and Sturm, Ruger & Company (NYSE:RGR). This group of stocks are in the aerospace/defense products & services industry and their market caps are closest to KAMN’s market cap.