Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Kornit Digital Ltd. (NASDAQ:KRNT) based on that data.
Is Kornit Digital Ltd. (NASDAQ:KRNT) undervalued? Money managers are taking a pessimistic view. The number of bullish hedge fund positions fell by 3 in recent months. Our calculations also showed that KRNT 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According to most stock holders, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at present, We hone in on the elite of this group, about 850 funds. It is estimated that this group of investors control the lion's share of the smart money's total capital, and by shadowing their inimitable stock picks, Insider Monkey has uncovered various investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year 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 .
[caption id="attachment_221556" align="aligncenter" width="397"] Richard Driehaus of Driehaus Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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 we're going to take a glance at the fresh hedge fund action encompassing Kornit Digital Ltd. (NASDAQ:KRNT).
What have hedge funds been doing with Kornit Digital Ltd. (NASDAQ:KRNT)?
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the fourth quarter of 2019. On the other hand, there were a total of 10 hedge funds with a bullish position in KRNT a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, G2 Investment Partners Management held the most valuable stake in Kornit Digital Ltd. (NASDAQ:KRNT), which was worth $6 million at the end of the third quarter. On the second spot was D E Shaw which amassed $4.7 million worth of shares. Driehaus Capital, Citadel Investment Group, and Aubrey Capital 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 G2 Investment Partners Management allocated the biggest weight to Kornit Digital Ltd. (NASDAQ:KRNT), around 1.97% of its 13F portfolio. Aubrey Capital Management is also relatively very bullish on the stock, earmarking 1.89 percent of its 13F equity portfolio to KRNT.
Due to the fact that Kornit Digital Ltd. (NASDAQ:KRNT) has experienced falling interest from the smart money, it's safe to say that there is a sect of money managers who were dropping their positions entirely last quarter. Intriguingly, Mark Coe's Intrinsic Edge Capital dropped the largest investment of the "upper crust" of funds monitored by Insider Monkey, worth close to $9.2 million in stock. Richard Mashaal's fund, Rima Senvest Management, also dropped its stock, about $6.8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Kornit Digital Ltd. (NASDAQ:KRNT) but similarly valued. These stocks are Eldorado Gold Corp (NYSE:EGO), Enanta Pharmaceuticals Inc (NASDAQ:ENTA), John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), and SITE Centers Corp. (NYSE:SITC). All of these stocks' market caps are closest to KRNT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGO,14,137122,1 ENTA,18,217411,-3 JBSS,14,63220,-3 SITC,21,47296,-1 Average,16.75,116262,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $28 million in KRNT's case. SITE Centers Corp. (NYSE:SITC) is the most popular stock in this table. On the other hand Eldorado Gold Corp (NYSE:EGO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Kornit Digital Ltd. (NASDAQ:KRNT) is even less popular than EGO. Hedge funds clearly dropped the ball on KRNT as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on KRNT as the stock returned 95.1% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.