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Is Kirkland Lake Gold Ltd. (KL) A Good Stock To Buy?

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article we look at what those investors think of Kirkland Lake Gold Ltd. (NYSE:KL).

Is KL a good stock to buy? Kirkland Lake Gold Ltd. (NYSE:KL) has experienced a decrease in activity from the world's largest hedge funds in recent months. Kirkland Lake Gold Ltd. (NYSE:KL) was in 22 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that KL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Eric Sprott Sprott Asset Management
Eric Sprott Sprott Asset Management

Eric Sprott of Sprott Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. Now we're going to take a glance at the recent hedge fund action encompassing Kirkland Lake Gold Ltd. (NYSE:KL).

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

At the end of June, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KL over the last 24 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.

The largest stake in Kirkland Lake Gold Ltd. (NYSE:KL) was held by Renaissance Technologies, which reported holding $109.8 million worth of stock at the end of June. It was followed by Galibier Capital Management with a $67.1 million position. Other investors bullish on the company included Paulson & Co, Sprott Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Galibier Capital Management allocated the biggest weight to Kirkland Lake Gold Ltd. (NYSE:KL), around 9.02% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 3.37 percent of its 13F equity portfolio to KL.

Seeing as Kirkland Lake Gold Ltd. (NYSE:KL) has experienced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few hedge funds that elected to cut their full holdings by the end of the second quarter. At the top of the heap, Joe Milano's Greenhouse Funds sold off the largest position of the 750 funds watched by Insider Monkey, worth close to $15.8 million in stock, and Robert Bishop's Impala Asset Management was right behind this move, as the fund said goodbye to about $3.9 million worth. These transactions are important to note, as total hedge fund interest fell by 3 funds by the end of the second quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Kirkland Lake Gold Ltd. (NYSE:KL) but similarly valued. We will take a look at Opendoor Technologies Inc. (NASDAQ:OPEN), Owens Corning (NYSE:OC), East West Bancorp, Inc. (NASDAQ:EWBC), Targa Resources Corp (NYSE:TRGP), Asana Inc. (NYSE:ASAN), Hubbell Incorporated (NYSE:HUBB), and Erie Indemnity Company (NASDAQ:ERIE). This group of stocks' market values are similar to KL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OPEN,35,765048,2 OC,34,425375,4 EWBC,24,480255,-1 TRGP,26,387970,2 ASAN,22,592249,0 HUBB,15,459124,0 ERIE,15,48433,3 Average,24.4,451208,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $451 million. That figure was $391 million in KL's case. Opendoor Technologies Inc. (NASDAQ:OPEN) is the most popular stock in this table. On the other hand Hubbell Incorporated (NYSE:HUBB) is the least popular one with only 15 bullish hedge fund positions. Kirkland Lake Gold Ltd. (NYSE:KL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KL is 43.1. 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 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on KL as the stock returned 18.7% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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