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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Kewaunee Scientific Corporation (NASDAQ:KEQU).
Kewaunee Scientific Corporation (NASDAQ:KEQU) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Innodata Inc (NASDAQ:INOD), Zomedica Pharmaceuticals Corp. (NYSE:ZOM), and Chicago Rivet & Machine Co. (NYSE:CVR) to gather more data points. Our calculations also showed that KEQU 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.
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 S&P 500 ETFs by 44 percentage points since March 2017 (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.
[caption id="attachment_262336" align="aligncenter" width="400"]
J. Carlo Cannell of Cannell Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's review the latest hedge fund action surrounding Kewaunee Scientific Corporation (NASDAQ:KEQU).
What does smart money think about Kewaunee Scientific Corporation (NASDAQ:KEQU)?
At Q1's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KEQU over the last 18 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, Renaissance Technologies was the largest shareholder of Kewaunee Scientific Corporation (NASDAQ:KEQU), with a stake worth $0.9 million reported as of the end of September. Trailing Renaissance Technologies was Minerva Advisors, which amassed a stake valued at $0.7 million. Cannell Capital was 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 Minerva Advisors allocated the biggest weight to Kewaunee Scientific Corporation (NASDAQ:KEQU), around 0.55% of its 13F portfolio. Cannell Capital is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to KEQU.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Kewaunee Scientific Corporation (NASDAQ:KEQU). These stocks are Innodata Inc (NASDAQ:INOD), Zomedica Pharmaceuticals Corp. (NYSE:ZOM), Chicago Rivet & Machine Co. (NYSE:CVR), and Abraxas Petroleum Corp. (NASDAQ:AXAS). This group of stocks' market values are closest to KEQU's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INOD,3,782,1 ZOM,1,3,0 CVR,2,1370,0 AXAS,5,289,-2 Average,2.75,611,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in KEQU's case. Abraxas Petroleum Corp. (NASDAQ:AXAS) is the most popular stock in this table. On the other hand Zomedica Pharmaceuticals Corp. (NYSE:ZOM) is the least popular one with only 1 bullish hedge fund positions. Kewaunee Scientific Corporation (NASDAQ:KEQU) is not the most popular stock in this group but hedge fund interest is still above average. 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on KEQU as the stock returned 21.7% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.