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KB Financial Group, Inc. (KB): Are Hedge Funds Right About This Stock?

Abigail Fisher

How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding KB Financial Group, Inc. (NYSE:KB).

KB Financial Group, Inc. (NYSE:KB) has experienced an increase in activity from the world's largest hedge funds recently. Our calculations also showed that KB isn't among the 30 most popular stocks among hedge funds.

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.

Ken Fisher FISHER ASSET MANAGEMENT

We're going to take a look at the latest hedge fund action regarding KB Financial Group, Inc. (NYSE:KB).

How are hedge funds trading KB Financial Group, Inc. (NYSE:KB)?

Heading into the first quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards KB over the last 14 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

KB_mar2019

Among these funds, Arrowstreet Capital held the most valuable stake in KB Financial Group, Inc. (NYSE:KB), which was worth $36.4 million at the end of the third quarter. On the second spot was Orbis Investment Management which amassed $7.9 million worth of shares. Moreover, Renaissance Technologies, Pzena Investment Management, and Fisher Asset Management were also bullish on KB Financial Group, Inc. (NYSE:KB), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key hedge funds were leading the bulls' herd. Renaissance Technologies, managed by Jim Simons, established the largest position in KB Financial Group, Inc. (NYSE:KB). Renaissance Technologies had $1.8 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also initiated a $0.3 million position during the quarter.

Let's go over hedge fund activity in other stocks similar to KB Financial Group, Inc. (NYSE:KB). We will take a look at FleetCor Technologies, Inc. (NYSE:FLT), Omnicom Group Inc. (NYSE:OMC), KKR & Co Inc. (NYSE:KKR), and American Water Works Company, Inc. (NYSE:AWK). This group of stocks' market values resemble KB's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLT,33,1320948,-4 OMC,18,765348,-1 KKR,29,2029628,-2 AWK,28,546210,8 Average,27,1165534,0.25 [/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 $1166 million. That figure was $49 million in KB's case. FleetCor Technologies, Inc. (NYSE:FLT) is the most popular stock in this table. On the other hand Omnicom Group Inc. (NYSE:OMC) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks KB Financial Group, Inc. (NYSE:KB) is even less popular than OMC. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately KB wasn't in this group. A few hedge funds that bet on KB were disappointed as the stock lost 7.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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