The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Kforce Inc. (NASDAQ:KFRC).
Kforce Inc. (NASDAQ:KFRC) was in 18 hedge funds' portfolios at the end of June. KFRC shareholders have witnessed a decrease in hedge fund interest recently. There were 22 hedge funds in our database with KFRC positions at the end of the previous quarter. Our calculations also showed that KFRC isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. We're going to view the new hedge fund action regarding Kforce Inc. (NASDAQ:KFRC).
What have hedge funds been doing with Kforce Inc. (NASDAQ:KFRC)?
At Q2's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the first quarter of 2019. On the other hand, there were a total of 16 hedge funds with a bullish position in KFRC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Kforce Inc. (NASDAQ:KFRC) was held by AQR Capital Management, which reported holding $27.9 million worth of stock at the end of March. It was followed by Royce & Associates with a $13.1 million position. Other investors bullish on the company included Arrowstreet Capital, GLG Partners, and Renaissance Technologies.
Judging by the fact that Kforce Inc. (NASDAQ:KFRC) has faced falling interest from the smart money, it's easy to see that there exists a select few money managers who were dropping their full holdings heading into Q3. It's worth mentioning that Andrew Feldstein and Stephen Siderow's Blue Mountain Capital cut the biggest investment of all the hedgies followed by Insider Monkey, totaling close to $1.2 million in stock, and Peter Muller's PDT Partners was right behind this move, as the fund sold off about $0.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q3.
Let's now review hedge fund activity in other stocks similar to Kforce Inc. (NASDAQ:KFRC). These stocks are Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Social Capital Hedosophia Holdings Corp. (NYSE:IPOA), Washington Trust Bancorp, Inc. (NASDAQ:WASH), and Unitil Corporation (NYSE:UTL). This group of stocks' market valuations are similar to KFRC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRZO,10,82451,-5 IPOA,23,315142,1 WASH,7,28822,3 UTL,9,85550,-1 Average,12.25,127991,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $80 million in KFRC's case. Social Capital Hedosophia Holdings Corp. (NYSE:IPOA) is the most popular stock in this table. On the other hand Washington Trust Bancorp, Inc. (NASDAQ:WASH) is the least popular one with only 7 bullish hedge fund positions. Kforce Inc. (NASDAQ:KFRC) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on KFRC as the stock returned 8.4% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.