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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Kontoor Brands, Inc. (NASDAQ:KTB) based on that data.
Is KTB a good stock to buy now? Kontoor Brands, Inc. (NASDAQ:KTB) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that KTB 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). At the end of this article we will also compare KTB to other stocks including Horace Mann Educators Corporation (NYSE:HMN), The Geo Group, Inc. (NYSE:GEO), and Sykes Enterprises, Incorporated (NASDAQ:SYKE) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Kerr Neilson of Platinum 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. Keeping this in mind let's check out the fresh hedge fund action surrounding Kontoor Brands, Inc. (NASDAQ:KTB).
Do Hedge Funds Think KTB Is A Good Stock To Buy Now?
At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KTB over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in Kontoor Brands, Inc. (NASDAQ:KTB). D E Shaw has a $20.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $15.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain Alexander Mitchell's Scopus Asset Management, Kerr Neilson's Platinum Asset Management and Steve Cohen's Point72 Asset Management. In terms of the portfolio weights assigned to each position Stormborn Capital Management allocated the biggest weight to Kontoor Brands, Inc. (NASDAQ:KTB), around 2.12% of its 13F portfolio. Scopus Asset Management is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to KTB.
Since Kontoor Brands, Inc. (NASDAQ:KTB) has experienced falling interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of money managers that slashed their positions entirely last quarter. It's worth mentioning that Austin Wiggins Hopper's AWH Capital dropped the largest investment of the 750 funds watched by Insider Monkey, comprising close to $1.7 million in stock, and Benjamin A. Smith's Laurion Capital Management was right behind this move, as the fund dumped about $1.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Kontoor Brands, Inc. (NASDAQ:KTB) but similarly valued. These stocks are Horace Mann Educators Corporation (NYSE:HMN), The Geo Group, Inc. (NYSE:GEO), Sykes Enterprises, Incorporated (NASDAQ:SYKE), Murphy Oil Corporation (NYSE:MUR), LTC Properties Inc (NYSE:LTC), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), and Ebang International Holdings Inc. (NASDAQ:EBON). This group of stocks' market valuations match KTB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMN,13,18160,7 GEO,12,65539,-8 SYKE,13,47344,-5 MUR,24,78785,9 LTC,9,10133,-6 ICPT,20,166374,-2 EBON,1,1584,1 Average,13.1,55417,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $81 million in KTB's case. Murphy Oil Corporation (NYSE:MUR) is the most popular stock in this table. On the other hand Ebang International Holdings Inc. (NASDAQ:EBON) is the least popular one with only 1 bullish hedge fund positions. Kontoor Brands, Inc. (NASDAQ:KTB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KTB is 67.7. 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 KTB as the stock returned 74.9% 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.