Smith & Wesson Holding Corporation (SWHC): Were Insiders Correct?

Smith & Wesson Holding Corporation (NASDAQ:SWHC) was in 14 hedge funds’ portfolio at the end of December. SWHC has seen a decrease in enthusiasm from smart money of late. There were 16 hedge funds in our database with SWHC holdings at the end of the previous quarter.

At the moment, there are dozens of indicators shareholders can use to analyze their holdings. Some of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best fund managers can outclass the market by a solid amount (see just how much).

Equally as integral, bullish insider trading sentiment is another way to break down the world of equities. There are a number of reasons for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this strategy if shareholders understand where to look (learn more here).

With all of this in mind, it’s important to take a look at the key action surrounding Smith & Wesson Holding Corporation (NASDAQ:SWHC).

What does the smart money think about Smith & Wesson Holding Corporation (NASDAQ:SWHC)?

At year’s end, a total of 14 of the hedge funds we track were bullish in this stock, a change of -13% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially.

According to our comprehensive database, Jeffrey Altman’s Owl Creek Asset Management had the most valuable position in Smith & Wesson Holding Corporation (NASDAQ:SWHC), worth close to $13.6 million, comprising 0.4% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $8.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Cliff Asness’s AQR Capital Management, Robert Bishop’s Impala Asset Management and Joel Greenblatt’s Gotham Asset Management.

Due to the fact that Smith & Wesson Holding Corporation (NASDAQ:SWHC) has faced a declination in interest from hedge fund managers, it’s easy to see that there were a few funds that elected to cut their entire stakes at the end of the year. At the top of the heap, William Duhamel’s Route One Investment Company cut the largest stake of the “upper crust” of funds we monitor, worth close to $13.7 million in stock.. Michael Johnston’s fund, Steelhead Partners, also dumped its stock, about $13.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds at the end of the year.

What do corporate executives and insiders think about Smith & Wesson Holding Corporation (NASDAQ:SWHC)?

Bullish insider trading is best served when the company in question has experienced transactions within the past six months. Over the last six-month time frame, Smith & Wesson Holding Corporation (NASDAQ:SWHC) has experienced 1 unique insiders buying, and 2 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 Smith & Wesson Holding Corporation (NASDAQ:SWHC). These stocks are Kaman Corporation (NYSE:KAMN), AeroVironment, Inc. (NASDAQ:AVAV), TASER International, Inc. (NASDAQ:TASR), Astronics Corporation (NASDAQ:ATRO), and AAR Corp. (NYSE:AIR). This group of stocks are the members of the aerospace/defense products & services industry and their market caps match SWHC’s market cap.

With the results shown by Insider Monkey’s time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and Smith & Wesson Holding Corporation (NASDAQ:SWHC) is no exception.

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