KEMET Corporation (KEM): Are Hedge Funds Right About This Stock?

KEMET Corporation (NYSE:KEM) has seen a decrease in enthusiasm from smart money of late.

In today’s marketplace, there are tons of methods market participants can use to track their holdings. A couple of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best money managers can outclass the S&P 500 by a superb amount (see just how much).

Equally as important, optimistic insider trading activity is a second way to parse down the investments you’re interested in. There are a variety of reasons for an insider to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this tactic if shareholders understand where to look (learn more here).

Now, it’s important to take a look at the recent action encompassing KEMET Corporation (NYSE:KEM).

What does the smart money think about KEMET Corporation (NYSE:KEM)?

In preparation for this quarter, a total of 5 of the hedge funds we track held long positions in this stock, a change of -44% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Eric Bannasch’s Cadian Capital had the biggest position in KEMET Corporation (NYSE:KEM), worth close to $27.7 million, accounting for 0.8% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $12.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish include Cliff Asness’s AQR Capital Management, Ken Brodkowitz and Mike Vermut’s Newland Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Seeing as KEMET Corporation (NYSE:KEM) has faced falling interest from hedge fund managers, it’s easy to see that there was a specific group of fund managers who sold off their full holdings at the end of the first quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest position of the “upper crust” of funds we key on, valued at about $0.5 million in stock.. Jim Simons’s fund, Renaissance Technologies, also cut its stock, about $0.5 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds at the end of the first quarter.

How are insiders trading KEMET Corporation (NYSE:KEM)?

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has seen transactions within the past half-year. Over the last half-year time frame, KEMET Corporation (NYSE:KEM) has seen 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

With the results shown by the aforementioned strategies, everyday investors should always monitor hedge fund and insider trading sentiment, and KEMET Corporation (NYSE:KEM) applies perfectly to this mantra.

Click here to learn why you should track hedge funds