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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Kforce Inc. (NASDAQ:KFRC) based on those filings.
Kforce Inc. (NASDAQ:KFRC) has seen a decrease in support from the world's most elite money managers in recent months. KFRC was in 15 hedge funds' portfolios at the end of March. There were 22 hedge funds in our database with KFRC holdings at the end of the previous quarter. Our calculations also showed that KFRC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most traders, hedge funds are viewed as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds trading at present, We choose to focus on the elite of this club, about 850 funds. These investment experts preside over the majority of all hedge funds' total asset base, and by tracking their finest equity investments, Insider Monkey has found numerous investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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Cliff Asness of AQR Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the latest hedge fund action surrounding Kforce Inc. (NASDAQ:KFRC).
How have hedgies been trading Kforce Inc. (NASDAQ:KFRC)?
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -32% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in KFRC a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Kforce Inc. (NASDAQ:KFRC), with a stake worth $15.2 million reported as of the end of September. Trailing Royce & Associates was AQR Capital Management, which amassed a stake valued at $12.1 million. Citadel Investment Group, D E Shaw, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Kforce Inc. (NASDAQ:KFRC), around 0.42% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.21 percent of its 13F equity portfolio to KFRC.
Because Kforce Inc. (NASDAQ:KFRC) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few money managers who were dropping their positions entirely in the first quarter. Interestingly, Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest stake of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $1.5 million in stock. David Harding's fund, Winton Capital Management, also dropped its stock, about $1.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 7 funds in the first quarter.
Let's check out hedge fund activity in other stocks similar to Kforce Inc. (NASDAQ:KFRC). We will take a look at Petmed Express Inc (NASDAQ:PETS), Redwood Trust, Inc. (NYSE:RWT), The Greenbrier Companies, Inc. (NYSE:GBX), and TechTarget Inc (NASDAQ:TTGT). This group of stocks' market valuations resemble KFRC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PETS,18,112993,-1 RWT,22,66955,9 GBX,8,13726,-4 TTGT,14,60057,-2 Average,15.5,63433,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $46 million in KFRC's case. Redwood Trust, Inc. (NYSE:RWT) is the most popular stock in this table. On the other hand The Greenbrier Companies, Inc. (NYSE:GBX) is the least popular one with only 8 bullish hedge fund positions. Kforce Inc. (NASDAQ:KFRC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately KFRC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); KFRC investors were disappointed as the stock returned 8.3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.