Is Kratos Defense & Security Solutions, Inc (KTOS) A Good Stock To Buy?

Since Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) has experienced a declination in interest from the smart money, it’s easy to see that there was a specific group of funds who were dropping their entire stakes by the end of the third quarter. Interestingly, Jim Simons’s Renaissance Technologies sold off the largest investment of the 700 funds followed by Insider Monkey, worth an estimated $1.7 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dropped about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by two funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) but similarly valued. These stocks are Papa Murphy’s Holdings Inc (NASDAQ:FRSH), Millennial Media, Inc. (NYSE:MM), Organovo Holdings Inc (NYSEMKT:ONVO), and Titan Machinery Inc. (NASDAQ:TITN). This group of stocks’ market caps are similar to KTOS’s market cap.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $35 million in KTOS’s case. Titan Machinery Inc. (NASDAQ:TITN) is the most popular stock in this table. On the other hand Papa Murphy’s Holdings Inc (NASDAQ:FRSH) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks, Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) is even less popular than FRSH. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.