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In this article we will analyze whether Kirkland Lake Gold Ltd. (NYSE:KL) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is KL stock a buy? Prominent investors were turning bullish. The number of long hedge fund bets went up by 2 lately. Kirkland Lake Gold Ltd. (NYSE:KL) was in 24 hedge funds' portfolios at the end of December. 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 Q4 rankings).
At the moment there are a lot of signals investors put to use to assess their holdings. A couple of the most underrated signals are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .
Eric Sprott of Sprott Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Now we're going to view 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 Q4's end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KL over the last 22 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in Kirkland Lake Gold Ltd. (NYSE:KL). Renaissance Technologies has a $142.2 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Paulson & Co, led by John Paulson, holding a $79.1 million position; 2.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism contain Eric Sprott's Sprott Asset Management, Joseph Sirdevan's Galibier Capital Management and Brad Dunkley and Blair Levinsky's Waratah Capital Advisors. 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 8.97% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, designating 6.73 percent of its 13F equity portfolio to KL.
As aggregate interest increased, key hedge funds were breaking ground themselves. Sprott Asset Management, managed by Eric Sprott, assembled the most outsized position in Kirkland Lake Gold Ltd. (NYSE:KL). Sprott Asset Management had $62.7 million invested in the company at the end of the quarter. Joe Milano's Greenhouse Funds also initiated a $30.4 million position during the quarter. The other funds with brand new KL positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Nicholas Bagnall's Te Ahumairangi Investment Management, and Dmitry Balyasny's Balyasny Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Kirkland Lake Gold Ltd. (NYSE:KL) but similarly valued. These stocks are Vail Resorts, Inc. (NYSE:MTN), Apollo Global Management Inc (NYSE:APO), Paylocity Holding Corp (NASDAQ:PCTY), The Carlyle Group Inc (NASDAQ:CG), The Scotts Miracle-Gro Company (NYSE:SMG), Bill.com Holdings, Inc. (NYSE:BILL), and Textron Inc. (NYSE:TXT). This group of stocks' market valuations are similar to KL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTN,31,937968,1 APO,30,2052942,2 PCTY,26,638940,-1 CG,21,369178,7 SMG,29,454757,-2 BILL,52,1993749,8 TXT,23,589474,0 Average,30.3,1005287,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1005 million. That figure was $498 million in KL's case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand The Carlyle Group Inc (NASDAQ:CG) is the least popular one with only 21 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 37.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately KL wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); KL investors were disappointed as the stock returned -7.9% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.