What's a smart AeroVironment, Inc. (NASDAQ:AVAV) investor to do?
In the eyes of many of your fellow readers, hedge funds are perceived as bloated, outdated financial tools of a period lost to current times. Although there are over 8,000 hedge funds in operation in present day, Insider Monkey aim at the crème de la crème of this group, around 525 funds. It is widely held that this group oversees the majority of all hedge funds' total capital, and by watching their highest quality equity investments, we've identified a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as useful, bullish insider trading activity is another way to look at the marketplace. Obviously, there are plenty of motivations for an insider to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this tactic if "monkeys" know where to look (learn more here).
What's more, it's important to analyze the newest info surrounding AeroVironment, Inc. (NASDAQ:AVAV).
At the end of the second quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of -25% from the first quarter. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.
According to our 13F database, Chuck Royce's Royce & Associates had the largest position in AeroVironment, Inc. (NASDAQ:AVAV), worth close to $11.6 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $3.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Joel Greenblatt's Gotham Asset Management, John Overdeck and David Siegel's Two Sigma Advisors and Israel Englander's Millennium Management.
As AeroVironment, Inc. (NASDAQ:AVAV) has experienced declining interest from the entirety of the hedge funds we track, logic holds that there were a few hedgies that elected to cut their positions entirely in Q1. Interestingly, Matthew Knauer and Mina Faltas's Nokota Management cut the largest stake of the "upper crust" of funds we key on, valued at about $2.3 million in stock, and Brian Ashford-Russell and Tim Woolley of Polar Capital was right behind this move, as the fund said goodbye to about $1.8 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds in Q1.
Legal insider trading, particularly when it's bullish, is particularly usable when the company in question has seen transactions within the past half-year. Over the latest half-year time frame, AeroVironment, Inc. (NASDAQ:AVAV) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to AeroVironment, Inc. (NASDAQ:AVAV). These stocks are AAR Corp. (NYSE:AIR), LMI Aerospace, Inc. (NASDAQ:LMIA), Smith & Wesson Holding Corporation (NASDAQ:SWHC), Astronics Corporation (NASDAQ:ATRO), and TASER International, Inc. (NASDAQ:TASR). All of these stocks are in the aerospace/defense products & services industry and their market caps are similar to AVAV's market cap.