Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
Hedge fund interest in Kirby Corporation (NYSE:KEX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare KEX to other stocks including nVent Electric plc (NYSE:NVT), Brunswick Corporation (NYSE:BC), and Janus Henderson Group plc (NYSE:JHG) to get a better sense of its popularity.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the latest hedge fund action regarding Kirby Corporation (NYSE:KEX).
How have hedgies been trading Kirby Corporation (NYSE:KEX)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KEX over the last 14 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Diamond Hill Capital was the largest shareholder of Kirby Corporation (NYSE:KEX), with a stake worth $160.6 million reported as of the end of September. Trailing Diamond Hill Capital was Royce & Associates, which amassed a stake valued at $90.5 million. Millennium Management, Polar Capital, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Kirby Corporation (NYSE:KEX) has experienced declining sentiment from hedge fund managers, we can see that there exists a select few hedge funds who sold off their full holdings heading into Q3. Intriguingly, Alexander Mitchell's Scopus Asset Management said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, worth an estimated $19.7 million in stock. Sander Gerber's fund, Hudson Bay Capital Management, also said goodbye to its stock, about $3.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Kirby Corporation (NYSE:KEX). We will take a look at nVent Electric plc (NYSE:NVT), Brunswick Corporation (NYSE:BC), Janus Henderson Group plc (NYSE:JHG), and Avnet, Inc. (NASDAQ:AVT). This group of stocks' market caps match KEX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVT,28,1015805,-1 BC,26,524487,-8 JHG,15,132302,-2 AVT,24,581967,1 Average,23.25,563640,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $564 million. That figure was $409 million in KEX's case. nVent Electric plc (NYSE:NVT) is the most popular stock in this table. On the other hand Janus Henderson Group plc (NYSE:JHG) is the least popular one with only 15 bullish hedge fund positions. Kirby Corporation (NYSE:KEX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on KEX, though not to the same extent, as the stock returned 18.6% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.