We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Kirby Corporation (NYSE:KEX) and determine whether hedge funds skillfully traded this stock.
Kirby Corporation (NYSE:KEX) was in 20 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 29. KEX investors should be aware of a decrease in activity from the world's largest hedge funds recently. There were 21 hedge funds in our database with KEX holdings at the end of March. Our calculations also showed that KEX isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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Ric Dillon of Diamond Hill Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let's check out the key hedge fund action encompassing Kirby Corporation (NYSE:KEX).
How have hedgies been trading Kirby Corporation (NYSE:KEX)?
Heading into the third quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KEX over the last 20 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Diamond Hill Capital, managed by Ric Dillon, holds the largest position in Kirby Corporation (NYSE:KEX). Diamond Hill Capital has a $137.7 million position in the stock, comprising 0.8% of its 13F portfolio. On Diamond Hill Capital's heels is Slate Path Capital, led by David Greenspan, holding a $69.4 million position; 4.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions encompass Jonathan Auerbach's Hound Partners, Chuck Royce's Royce & Associates and Brian Gootzeit and Andrew Frank's StackLine Partners. In terms of the portfolio weights assigned to each position StackLine Partners allocated the biggest weight to Kirby Corporation (NYSE:KEX), around 13.49% of its 13F portfolio. Hound Partners is also relatively very bullish on the stock, earmarking 4.14 percent of its 13F equity portfolio to KEX.
Because Kirby Corporation (NYSE:KEX) has witnessed declining sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of fund managers who sold off their full holdings by the end of the second quarter. At the top of the heap, Jonathan Barrett and Paul Segal's Luminus Management dropped the biggest stake of the 750 funds watched by Insider Monkey, valued at close to $15.3 million in stock. Renaissance Technologies, also cut its stock, about $6.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the second quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Kirby Corporation (NYSE:KEX) but similarly valued. We will take a look at The Hain Celestial Group, Inc. (NASDAQ:HAIN), KBR, Inc. (NYSE:KBR), BRF SA (NYSE:BRFS), Box, Inc. (NYSE:BOX), Pinnacle Financial Partners (NASDAQ:PNFP), nVent Electric plc (NYSE:NVT), and Coherent, Inc. (NASDAQ:COHR). This group of stocks' market valuations resemble KEX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HAIN,24,829403,4 KBR,35,604967,7 BRFS,16,45626,2 BOX,33,655973,-1 PNFP,14,32187,1 NVT,27,428424,-2 COHR,32,208020,9 Average,25.9,400657,2.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $401 million. That figure was $375 million in KEX's case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand Pinnacle Financial Partners (NASDAQ:PNFP) is the least popular one with only 14 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 overall hedge fund sentiment score for KEX is 24.7. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately KEX wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); KEX investors were disappointed as the stock returned -32.5% in the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.