What Makes Kennametal (KMT) an Investment Opportunity?

April 15, 2024

2 minutes read

Heartland Advisors, an investment management company, released its “Heartland Value Plus Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, the strategy returned 1.5% underperforming the Russell 2000 Small-Cap Value Index’s 2.9% returns. The underperformance was due to the stock selection in Health Care, Information Technology, and Materials sectors. On the other hand, the selection effect helped the Strategy to outperform the benchmark in the Consumer Discretionary, Consumer Staples, and Financials sectors. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Heartland Value Plus Fund featured stocks like Kennametal Inc. (NYSE:KMT) in the Q1 2024 investor letter. Headquartered in Pittsburgh, Pennsylvania, Kennametal Inc. (NYSE:KMT) engages in the manufacturing of tungsten carbide metal cutting tooling. On April 12, 2024, Kennametal Inc. (NYSE:KMT) stock closed at $23.50 per share. One-month return of Kennametal Inc. (NYSE:KMT) was 0.38%, and its shares lost 10.92% of their value over the last 52 weeks. Kennametal Inc. (NYSE:KMT) has a market capitalization of $1.863 billion.

Heartland Value Plus Fund stated the following regarding Kennametal Inc. (NYSE:KMT) in its first quarter 2024 investor letter:

We remain committed to Heartland’s 10 Principles of Value Investing™, which favors companies with low leverage, strong free cash flow, and a successful track record of capital allocation. We also look for companies that are deploying self-help strategies to improve their competitive standing and profitability through strategic and operational improvements.

Lately, we’ve been finding opportunities in companies that have been through their own mini recessions and have proactively adjusted so that even if the economy doesn’t improve, their outlooks hopefully will. And should demand rebound, these companies that have already course corrected and taken costs out are likely to emerge stronger with higher operating leverage.

Here are two good examples of such opportunities: Industrials. Kennametal Inc. (NYSE:KMT), which manufactures industrial cutting tools and components, is another new position initiated during the quarter. The company operates two businesses: a metal cutting unit that sells into a variety of end markets including aerospace and defense and energy, along with an infrastructure unit that provides earth cutting and wear solutions. …” (Click here to read the full text)

A machinist worker in a factory using a precision cutting tool.

Kennametal Inc. (NYSE:KMT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Kennametal Inc. (NYSE:KMT) was held by 26 hedge fund portfolios, compared to 24 in the previous quarter, according to our database. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.