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Hedge Funds Are Cashing Out Of Kilroy Realty Corp (KRC)

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In this article we will analyze whether Kilroy Realty Corp (NYSE:KRC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Kilroy Realty Corp (NYSE:KRC) was in 26 hedge funds' portfolios at the end of June. The all time high for this statistic is 27. KRC investors should pay attention to a decrease in support from the world's most elite money managers lately. There were 27 hedge funds in our database with KRC holdings at the end of March. Our calculations also showed that KRC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Chris Hohn's top 10 stock picks
Chris Hohn's top 10 stock picks

Chris Hohn

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's view the recent hedge fund action encompassing Kilroy Realty Corp (NYSE:KRC).

Do Hedge Funds Think KRC Is A Good Stock To Buy Now?

At Q2's end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in KRC a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is KRC A Good Stock To Buy?
Is KRC A Good Stock To Buy?

The largest stake in Kilroy Realty Corp (NYSE:KRC) was held by Oaktree Capital Management, which reported holding $63.4 million worth of stock at the end of June. It was followed by Long Pond Capital with a $45 million position. Other investors bullish on the company included AQR Capital Management, Schonfeld Strategic Advisors, and Gillson Capital. In terms of the portfolio weights assigned to each position Masterton Capital Management allocated the biggest weight to Kilroy Realty Corp (NYSE:KRC), around 3.21% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, designating 3.14 percent of its 13F equity portfolio to KRC.

Since Kilroy Realty Corp (NYSE:KRC) has experienced a decline in interest from hedge fund managers, logic holds that there were a few money managers that decided to sell off their positions entirely heading into Q3. Interestingly, Stuart J. Zimmer's Zimmer Partners said goodbye to the biggest position of the 750 funds tracked by Insider Monkey, totaling close to $128 million in stock, and Charles Fitzgerald's V3 Capital was right behind this move, as the fund said goodbye to about $16.7 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds heading into Q3.

Let's now take a look at hedge fund activity in other stocks similar to Kilroy Realty Corp (NYSE:KRC). We will take a look at Nutanix, Inc. (NASDAQ:NTNX), Tilray, Inc. (NASDAQ:TLRY), OneMain Holdings Inc (NYSE:OMF), Beam Therapeutics Inc. (NASDAQ:BEAM), United Therapeutics Corporation (NASDAQ:UTHR), YETI Holdings, Inc. (NYSE:YETI), and Kinross Gold Corporation (NYSE:KGC). This group of stocks' market values resemble KRC's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NTNX,29,1165939,0 TLRY,17,94865,-4 OMF,41,994909,-2 BEAM,21,1771681,3 UTHR,45,2334119,3 YETI,34,282409,4 KGC,28,360274,1 Average,30.7,1000599,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $1001 million. That figure was $241 million in KRC's case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Tilray, Inc. (NASDAQ:TLRY) is the least popular one with only 17 bullish hedge fund positions. Kilroy Realty Corp (NYSE:KRC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KRC is 49. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately KRC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KRC investors were disappointed as the stock returned 0.9% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.