Is Kemper Corporation (NYSE:KMPR) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Kemper Corporation (NYSE:KMPR) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds' portfolios at the end of September. At the end of this article we will also compare KMPR to other stocks including Manhattan Associates, Inc. (NASDAQ:MANH), Berry Global Group Inc (NYSE:BERY), and Oshkosh Corporation (NYSE:OSK) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to view the latest hedge fund action surrounding Kemper Corporation (NYSE:KMPR).
How have hedgies been trading Kemper Corporation (NYSE:KMPR)?
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in KMPR 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.
Among these funds, Citadel Investment Group held the most valuable stake in Kemper Corporation (NYSE:KMPR), which was worth $28 million at the end of the third quarter. On the second spot was Marshall Wace which amassed $26.2 million worth of shares. Chilton Investment Company, Millennium Management, and Renaissance Technologies 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 12th Street Asset Management allocated the biggest weight to Kemper Corporation (NYSE:KMPR), around 1.11% of its 13F portfolio. Chilton Investment Company is also relatively very bullish on the stock, earmarking 0.82 percent of its 13F equity portfolio to KMPR.
Judging by the fact that Kemper Corporation (NYSE:KMPR) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of fund managers that elected to cut their positions entirely in the third quarter. It's worth mentioning that Donald Sussman's Paloma Partners sold off the largest position of the 750 funds tracked by Insider Monkey, totaling an estimated $6.6 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dropped its stock, about $0.7 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Kemper Corporation (NYSE:KMPR) but similarly valued. We will take a look at Manhattan Associates, Inc. (NASDAQ:MANH), Berry Global Group Inc (NYSE:BERY), Oshkosh Corporation (NYSE:OSK), and Paylocity Holding Corporation (NASDAQ:PCTY). All of these stocks' market caps match KMPR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MANH,22,440000,5 BERY,39,1571093,-1 OSK,22,434865,-2 PCTY,25,313646,-3 Average,27,689901,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $690 million. That figure was $155 million in KMPR's case. Berry Global Group Inc (NYSE:BERY) is the most popular stock in this table. On the other hand Manhattan Associates, Inc. (NASDAQ:MANH) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Kemper Corporation (NYSE:KMPR) is even less popular than MANH. Hedge funds dodged a bullet by taking a bearish stance towards KMPR. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately KMPR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); KMPR investors were disappointed as the stock returned -4.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.