The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Kinsale Capital Group, Inc. (NASDAQ:KNSL).
Kinsale Capital Group, Inc. (NASDAQ:KNSL) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds' portfolios at the end of June. At the end of this article we will also compare KNSL to other stocks including Colony Credit Real Estate, Inc. (NYSE:CLNC), Steelcase Inc. (NYSE:SCS), and Acacia Communications, Inc. (NASDAQ:ACIA) to get a better sense of its popularity. Our calculations also showed that KNSL isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's review the recent hedge fund action encompassing Kinsale Capital Group, Inc. (NASDAQ:KNSL).
How are hedge funds trading Kinsale Capital Group, Inc. (NASDAQ:KNSL)?
Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KNSL over the last 16 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Driehaus Capital held the most valuable stake in Kinsale Capital Group, Inc. (NASDAQ:KNSL), which was worth $17.3 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $7.5 million worth of shares. Moreover, D E Shaw, AQR Capital Management, and PEAK6 Capital Management were also bullish on Kinsale Capital Group, Inc. (NASDAQ:KNSL), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Kinsale Capital Group, Inc. (NASDAQ:KNSL) has witnessed declining sentiment from the smart money, it's easy to see that there is a sect of funds who were dropping their full holdings by the end of the second quarter. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace LLP cut the biggest investment of all the hedgies watched by Insider Monkey, totaling an estimated $0.9 million in stock. Andrew Feldstein and Stephen Siderow's fund, Blue Mountain Capital, also said goodbye to its stock, about $0 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to Kinsale Capital Group, Inc. (NASDAQ:KNSL). These stocks are Colony Credit Real Estate, Inc. (NYSE:CLNC), Steelcase Inc. (NYSE:SCS), Acacia Communications, Inc. (NASDAQ:ACIA), and Senior Housing Properties Trust (NASDAQ:SNH). This group of stocks' market caps resemble KNSL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLNC,8,21487,2 SCS,19,71817,-5 ACIA,28,295932,-3 SNH,13,22338,-4 Average,17,102894,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $34 million in KNSL's case. Acacia Communications, Inc. (NASDAQ:ACIA) is the most popular stock in this table. On the other hand Colony Credit Real Estate, Inc. (NYSE:CLNC) is the least popular one with only 8 bullish hedge fund positions. Kinsale Capital Group, Inc. (NASDAQ:KNSL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on KNSL as the stock returned 13% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.