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Kearny Financial Corp. (KRNY): Hedge Funds In Wait-and-See Mode

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At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Kearny Financial Corp. (NASDAQ:KRNY) makes for a good investment right now.

Hedge fund interest in Kearny Financial Corp. (NASDAQ:KRNY) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that KRNY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 Customers Bancorp Inc (NYSE:CUBI), Danaos Corporation (NYSE:DAC), and Heritage Financial Corporation (NASDAQ:HFWA) to gather more data points.

In today’s marketplace there are a large number of signals shareholders use to grade their stock investments. Some of the best signals are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can beat the market by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Fred DiSanto Ancora Advisors
Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's take a peek at the latest hedge fund action regarding Kearny Financial Corp. (NASDAQ:KRNY).

Do Hedge Funds Think KRNY Is A Good Stock To Buy Now?

At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards KRNY over the last 23 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.

Among these funds, Renaissance Technologies held the most valuable stake in Kearny Financial Corp. (NASDAQ:KRNY), which was worth $61.3 million at the end of the fourth quarter. On the second spot was Driehaus Capital which amassed $13.5 million worth of shares. Ancora Advisors, Millennium Management, and Arrowstreet Capital 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 MFP Investors allocated the biggest weight to Kearny Financial Corp. (NASDAQ:KRNY), around 0.27% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to KRNY.

Due to the fact that Kearny Financial Corp. (NASDAQ:KRNY) has faced a decline in interest from the aggregate hedge fund industry, it's easy to see that there exists a select few hedge funds that slashed their positions entirely heading into Q2. Intriguingly, Lawrence Seidman's Seidman Investment Partnership dropped the largest investment of the 750 funds tracked by Insider Monkey, valued at close to $5.8 million in stock. John D. Gillespie's fund, Prospector Partners, also dropped its stock, about $3.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Kearny Financial Corp. (NASDAQ:KRNY) but similarly valued. These stocks are Customers Bancorp Inc (NYSE:CUBI), Danaos Corporation (NYSE:DAC), Heritage Financial Corporation (NASDAQ:HFWA), Vaxcyte, Inc. (NASDAQ:PCVX), Cerus Corporation (NASDAQ:CERS), G1 Therapeutics, Inc. (NASDAQ:GTHX), and Triumph Group Inc (NYSE:TGI). This group of stocks' market caps are closest to KRNY's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CUBI,15,55455,4 DAC,12,122088,1 HFWA,5,19017,-1 PCVX,10,187033,-2 CERS,15,265595,1 GTHX,12,37716,-4 TGI,22,197218,4 Average,13,126303,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $120 million in KRNY's case. Triumph Group Inc (NYSE:TGI) is the most popular stock in this table. On the other hand Heritage Financial Corporation (NASDAQ:HFWA) is the least popular one with only 5 bullish hedge fund positions. Kearny Financial Corp. (NASDAQ:KRNY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KRNY is 63.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately KRNY wasn't nearly as popular as these 5 stocks and hedge funds that were betting on KRNY were disappointed as the stock returned -3.8% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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