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We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Kirkland's, Inc. (NASDAQ:KIRK) based on that data.
Is KIRK a good stock to buy now? Kirkland's, Inc. (NASDAQ:KIRK) has experienced an increase in support from the world's most elite money managers lately. Kirkland's, Inc. (NASDAQ:KIRK) was in 11 hedge funds' portfolios at the end of September. The all time high for this statistics is 18. Our calculations also showed that KIRK isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Nick Thakore of Diametric 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 recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind we're going to take a look at the new hedge fund action regarding Kirkland's, Inc. (NASDAQ:KIRK).
Do Hedge Funds Think KIRK Is A Good Stock To Buy Now?
At the end of September, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 57% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KIRK over the last 21 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Osmium Partners held the most valuable stake in Kirkland's, Inc. (NASDAQ:KIRK), which was worth $11 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $7.5 million worth of shares. Impala Asset Management, Wexford Capital, and Two Sigma Advisors 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 Osmium Partners allocated the biggest weight to Kirkland's, Inc. (NASDAQ:KIRK), around 27.81% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, dishing out 0.55 percent of its 13F equity portfolio to KIRK.
As one would reasonably expect, key hedge funds have jumped into Kirkland's, Inc. (NASDAQ:KIRK) headfirst. Impala Asset Management, managed by Robert Bishop, assembled the most outsized position in Kirkland's, Inc. (NASDAQ:KIRK). Impala Asset Management had $5.5 million invested in the company at the end of the quarter. Charles Davidson and Joseph Jacobs's Wexford Capital also made a $1.7 million investment in the stock during the quarter. The other funds with brand new KIRK positions are Nick Thakore's Diametric Capital, Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital), and Greg Eisner's Engineers Gate Manager.
Let's check out hedge fund activity in other stocks similar to Kirkland's, Inc. (NASDAQ:KIRK). We will take a look at Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL), Chico's FAS, Inc. (NYSE:CHS), Republic First Bancorp, Inc. (NASDAQ:FRBK), Adamas Pharmaceuticals Inc (NASDAQ:ADMS), Remark Holdings, Inc. (NASDAQ:MARK), Innovative Solutions & Support Inc (NASDAQ:ISSC), and Permian Basin Royalty Trust (NYSE:PBT). All of these stocks' market caps are similar to KIRK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PANL,1,240,0 CHS,12,23731,-4 FRBK,5,2577,-2 ADMS,12,28074,1 MARK,3,1343,-2 ISSC,5,5403,2 PBT,3,1010,-1 Average,5.9,8911,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $29 million in KIRK's case. Chico's FAS, Inc. (NYSE:CHS) is the most popular stock in this table. On the other hand Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL) is the least popular one with only 1 bullish hedge fund positions. Kirkland's, Inc. (NASDAQ:KIRK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KIRK is 72.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on KIRK as the stock returned 122.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.