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We at Insider Monkey have gone over 866 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 March 31st. In this article, we look at what those funds think of Kirkland Lake Gold Ltd. (NYSE:KL) based on that data.
Kirkland Lake Gold Ltd. (NYSE:KL) investors should be aware of an increase in enthusiasm from smart money of late. Kirkland Lake Gold Ltd. (NYSE:KL) was in 25 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. There were 24 hedge funds in our database with KL positions at the end of the fourth quarter. Our calculations also showed that KL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
John Paulson of Paulson & Co
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. With all of this in mind we're going to take a peek at the recent hedge fund action surrounding Kirkland Lake Gold Ltd. (NYSE:KL).
Do Hedge Funds Think KL Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in KL a year ago. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Kirkland Lake Gold Ltd. (NYSE:KL), with a stake worth $108.8 million reported as of the end of March. Trailing Renaissance Technologies was Paulson & Co, which amassed a stake valued at $63.9 million. Galibier Capital Management, Sprott Asset Management, and Citadel Investment Group 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 Galibier Capital Management allocated the biggest weight to Kirkland Lake Gold Ltd. (NYSE:KL), around 8.46% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, setting aside 4.26 percent of its 13F equity portfolio to KL.
As aggregate interest increased, key hedge funds have been driving this bullishness. D E Shaw, managed by D. E. Shaw, created the most outsized position in Kirkland Lake Gold Ltd. (NYSE:KL). D E Shaw had $10.1 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky's Waratah Capital Advisors also made a $2.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital, Noam Gottesman's GLG Partners, and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).
Let's now take a look at hedge fund activity in other stocks similar to Kirkland Lake Gold Ltd. (NYSE:KL). We will take a look at AGNC Investment Corp. (NASDAQ:AGNC), Ralph Lauren Corporation (NYSE:RL), Nielsen Holdings plc (NYSE:NLSN), Zions Bancorporation, National Association (NASDAQ:ZION), Commerce Bancshares, Inc. (NASDAQ:CBSH), Store Capital Corporation (NYSE:STOR), and RealPage, Inc. (NASDAQ:RP). This group of stocks' market values are closest to KL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGNC,18,167634,-7 RL,34,955242,-1 NLSN,34,1981675,0 ZION,24,193865,-4 CBSH,13,73163,-3 STOR,13,886150,1 RP,50,2495942,2 Average,26.6,964810,-1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $965 million. That figure was $401 million in KL's case. RealPage, Inc. (NASDAQ:RP) is the most popular stock in this table. On the other hand Commerce Bancshares, Inc. (NASDAQ:CBSH) is the least popular one with only 13 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 49. 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 July 9th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on KL, though not to the same extent, as the stock returned 17.2% since the end of Q1 (through July 9th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.