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This Metric Says You Are Smart to Sell AeroVironment, Inc. (AVAV)

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AeroVironment, Inc. (NASDAQ:AVAV) was in 8 hedge funds’ portfolio at the end of March. AVAV investors should pay attention to a decrease in enthusiasm from smart money in recent months. There were 13 hedge funds in our database with AVAV positions at the end of the previous quarter.

If you’d ask most shareholders, hedge funds are viewed as underperforming, old financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey look at the crème de la crème of this group, about 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total capital, and by tracking their highest performing investments, we have discovered a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

AeroVironment, Inc. (NASDAQ:AVAV)Equally as beneficial, bullish insider trading activity is another way to parse down the world of equities. As the old adage goes: there are many reasons for an insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the impressive potential of this tactic if “monkeys” know what to do (learn more here).

With all of this in mind, let’s take a glance at the recent action regarding AeroVironment, Inc. (NASDAQ:AVAV).

What does the smart money think about AeroVironment, Inc. (NASDAQ:AVAV)?

At Q1’s end, a total of 8 of the hedge funds we track were long in this stock, a change of -38% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes considerably.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in AeroVironment, Inc. (NASDAQ:AVAV). Royce & Associates has a $4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $3.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Matthew Knauer and Mina Faltas’s Nokota Management, Joel Greenblatt’s Gotham Asset Management and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Due to the fact that AeroVironment, Inc. (NASDAQ:AVAV) has experienced a declination in interest from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies that decided to sell off their positions entirely in Q1. Intriguingly, Mike Vranos’s Ellington said goodbye to the biggest investment of all the hedgies we track, worth close to $1.3 million in stock., and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund sold off about $1.1 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds in Q1.

Insider trading activity in AeroVironment, Inc. (NASDAQ:AVAV)

Insider purchases made by high-level executives is most useful when the company in question has seen transactions within the past six months. Over the last 180-day time frame, AeroVironment, Inc. (NASDAQ:AVAV) has seen 1 unique insiders purchasing, and 4 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 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). This group of stocks are the members of the aerospace/defense products & services industry and their market caps resemble AVAV’s market cap.

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