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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 have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Eastman Kodak Co. (NYSE:KODK) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is KODK a good stock to buy now? Investors who are in the know were turning bullish. The number of bullish hedge fund positions advanced by 12 lately. Eastman Kodak Co. (NYSE:KODK) was in 15 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that KODK 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). There were 3 hedge funds in our database with KODK holdings at the end of June.
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.
Mason Hawkins of Southeastern Asset Management
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. Now we're going to review the key hedge fund action encompassing Eastman Kodak Co. (NYSE:KODK).
Do Hedge Funds Think KODK Is A Good Stock To Buy Now?
At third quarter's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 400% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in KODK a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Southeastern Asset Management held the most valuable stake in Eastman Kodak Co. (NYSE:KODK), which was worth $22.4 million at the end of the third quarter. On the second spot was Coatue Management which amassed $11 million worth of shares. GMT Capital, Millennium 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 GMT Capital allocated the biggest weight to Eastman Kodak Co. (NYSE:KODK), around 0.63% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, dishing out 0.58 percent of its 13F equity portfolio to KODK.
As industrywide interest jumped, key money managers have jumped into Eastman Kodak Co. (NYSE:KODK) headfirst. Coatue Management, managed by Philippe Laffont, assembled the most outsized position in Eastman Kodak Co. (NYSE:KODK). Coatue Management had $11 million invested in the company at the end of the quarter. Thomas E. Claugus's GMT Capital also initiated a $8.7 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, OZ Management, and Traci Lerner's Chescapmanager LLC.
Let's now take a look at hedge fund activity in other stocks similar to Eastman Kodak Co. (NYSE:KODK). We will take a look at Immatics N.V. (NASDAQ:IMTX), Himax Technologies, Inc. (NASDAQ:HIMX), Meta Financial Group Inc. (NASDAQ:CASH), Conduent Incorporated (NASDAQ:CNDT), National Western Life Group Inc. (NASDAQ:NWLI), GameStop Corp. (NYSE:GME), and AAR Corp. (NYSE:AIR). This group of stocks' market valuations match KODK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMTX,22,161638,22 HIMX,6,42466,-3 CASH,6,41879,-10 CNDT,16,185777,-5 NWLI,7,10294,0 GME,28,164392,9 AIR,18,43968,-1 Average,14.7,92916,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $54 million in KODK's case. GameStop Corp. (NYSE:GME) is the most popular stock in this table. On the other hand Himax Technologies, Inc. (NASDAQ:HIMX) is the least popular one with only 6 bullish hedge fund positions. Eastman Kodak Co. (NYSE:KODK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KODK is 60.5. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on KODK as the stock returned 9.9% since the end of Q3 (through 12/14) 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.