At the moment, there are a multitude of metrics shareholders can use to track stocks. Some of the best are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top fund managers can outclass their index-focused peers by a healthy amount (see just how much).
Equally as integral, bullish insider trading sentiment is a second way to parse down the marketplace. Just as you’d expect, there are a variety of motivations for a bullish insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if “monkeys” understand what to do (learn more here).
With these “truths” under our belt, let’s take a peek at the recent action regarding Kadant Inc. (NYSE:KAI).
What have hedge funds been doing with Kadant Inc. (NYSE:KAI)?
Heading into 2013, a total of 7 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier; in our experience, this represents a bearish indicator. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly.
Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the biggest position in Kadant Inc. (NYSE:KAI). Royce & Associates has a $13 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which held a $2.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Israel Englander’s Millennium Management and Jim Simons’s Renaissance Technologies.
How are insiders trading Kadant Inc. (NYSE:KAI)?
Insider buying is most useful when the company in focus has seen transactions within the past half-year. Over the last half-year time period, Kadant Inc. (NYSE:KAI) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Kadant Inc. (NYSE:KAI). These stocks are Flow International Corporation (NASDAQ:FLOW), Ampco-Pittsburgh Corp. (NYSE:AP), Global Power Equipment Group Inc (NASDAQ:GLPW), Twin Disc, Incorporated (NASDAQ:TWIN), and Marine Products Corp. (NYSE:MPX). All of these stocks are in the diversified machinery industry and their market caps resemble KAI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Flow International Corporation (NASDAQ:FLOW) | 12 | 0 | 0 |
| Ampco-Pittsburgh Corp. (NYSE:AP) | 5 | 0 | 0 |
| Global Power Equipment Group Inc (NASDAQ:GLPW) | 8 | 1 | 0 |
| Twin Disc, Incorporated (NASDAQ:TWIN) | 5 | 1 | 0 |
| Marine Products Corp. (NYSE:MPX) | 1 | 0 | 0 |
With the returns demonstrated by our research, retail investors should always watch hedge fund and insider trading activity, and Kadant Inc. (NYSE:KAI) is an important part of this process.
