KEMET Corporation (NYSE:KEM) investors should be aware of a decrease in hedge fund sentiment of late.
If you’d ask most market participants, hedge funds are assumed to be worthless, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we hone in on the crème de la crème of this group, close to 450 funds. It is estimated that this group oversees most of the smart money’s total capital, and by tracking their best investments, we have revealed a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year 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 outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as key, positive insider trading activity is a second way to parse down the stock market universe. Obviously, there are a number of stimuli for an insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if shareholders understand what to do (learn more here).
With all of this in mind, it’s important to take a look at the key action encompassing KEMET Corporation (NYSE:KEM).
What have hedge funds been doing with KEMET Corporation (NYSE:KEM)?
At year’s end, a total of 9 of the hedge funds we track were long in this stock, a change of -31% from the previous quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully.
Of the funds we track, Cadian Capital, managed by Eric Bannasch, holds the largest position in KEMET Corporation (NYSE:KEM). Cadian Capital has a $22.3 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $9.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Cliff Asness’s AQR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’s Renaissance Technologies.
Since KEMET Corporation (NYSE:KEM) has witnessed declining sentiment from hedge fund managers, logic holds that there exists a select few hedgies that elected to cut their positions entirely last quarter. At the top of the heap, Joel Greenblatt’s Gotham Asset Management sold off the largest investment of the “upper crust” of funds we key on, worth an estimated $0.4 million in stock.. Mario Gabelli’s fund, GAMCO Investors, also dropped its stock, about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds last quarter.
How have insiders been trading KEMET Corporation (NYSE:KEM)?
Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, KEMET Corporation (NYSE:KEM) has seen 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to KEMET Corporation (NYSE:KEM). These stocks are Vicor Corp (NASDAQ:VICR), Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO), CTS Corporation (NYSE:CTS), and UniPixel Inc (NASDAQ:UNXL). This group of stocks are the members of the diversified electronics industry and their market caps resemble KEM’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Vicor Corp (NASDAQ:VICR)||10||0||0|
|Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO)||7||0||0|
|CTS Corporation (NYSE:CTS)||6||0||2|
|UniPixel Inc (NASDAQ:UNXL)||5||0||7|
With the results shown by our studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and KEMET Corporation (NYSE:KEM) is no exception.