Next up is Kennametal Inc. (NYSE:KMT), a supplier of tools for the engineering, aerospace, and transportation industries, which has been scooped up by 4 different insiders in 10 separate purchases since November 19. All told, insiders have bought up over 25,000 shares at a price of over $1 million. That’s a far cry from a year-and-a-half-ago, when we reported that insiders were selling Kennametal, though our funds were higher on it. As it turned out, the insiders were wrong to sell (remember, insider selling activity is less informative than buying activity), and our funds were right, as Kennametal had a very strong second half of 2013, rising over 25%.
Since those all-time highs however, things have been on a rather precipitous decline for Kennametal Inc. (NYSE:KMT), with the stock down 32.34% since the beginning of 2014. Kennametal has failed to meet revenue expectations for the past year, in the most recent case posting second quarter fiscal 2015 revenue of $676 million, well below consensus estimates of $709 million.
Unlike with Verastem Inc (NASDAQ:VSTM), analysts are not nearly as bullish on Kennametal Inc. (NYSE:KMT), despite it trading at 2-year lows. Credit Suisse reiterated a ‘Neutral’ rating on January 30, Jefferies Group reiterated a ‘Hold’ rating on January 16, while also lowering their price target to $35 from $40, and Zacks downgraded Kennametal to an ‘Underperform’ rating on January 14. So far it appears the insiders are winning, as Kennametal was up nearly 12% this past week.
John W. Rogers’ Ariel Investments was a big believer in Kennametal Inc. (NYSE:KMT), with ownership of 3.94 million shares. Institutional ownership of Kennametal is also extremely high, at 99%.