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Is KVH Industries, Inc. (KVHI) A Good Stock To Buy?

Reymerlyn Martin

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards KVH Industries, Inc. (NASDAQ:KVHI).

Is KVH Industries, Inc. (NASDAQ:KVHI) worth your attention right now? Money managers are taking a bullish view. The number of bullish hedge fund positions inched up by 2 recently. Our calculations also showed that KVHI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

[caption id="attachment_189632" align="aligncenter" width="600"] David Harding of Winton Capital Management[/caption]

David Harding

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's check out the latest hedge fund action surrounding KVH Industries, Inc. (NASDAQ:KVHI).

How have hedgies been trading KVH Industries, Inc. (NASDAQ:KVHI)?

At Q3's end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KVHI over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Portolan Capital Management was the largest shareholder of KVH Industries, Inc. (NASDAQ:KVHI), with a stake worth $6.2 million reported as of the end of September. Trailing Portolan Capital Management was Renaissance Technologies, which amassed a stake valued at $4.8 million. Polar Capital, Winton Capital Management, and Springbok Capital 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 Portolan Capital Management allocated the biggest weight to KVH Industries, Inc. (NASDAQ:KVHI), around 0.7% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to KVHI.

Now, key money managers have been driving this bullishness. Winton Capital Management, managed by David Harding, initiated the most valuable position in KVH Industries, Inc. (NASDAQ:KVHI). Winton Capital Management had $0.5 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle's Springbok Capital also initiated a $0.1 million position during the quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as KVH Industries, Inc. (NASDAQ:KVHI) but similarly valued. These stocks are Fulgent Genetics, Inc. (NASDAQ:FLGT), Community Bankers Trust Corp. (NASDAQ:ESXB), HOOKIPA Pharma Inc. (NASDAQ:HOOK), and Ferroglobe PLC (NASDAQ:GSM). This group of stocks' market valuations match KVHI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLGT,5,4358,2 ESXB,3,18197,-1 HOOK,6,33847,1 GSM,9,24128,-2 Average,5.75,20133,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $14 million in KVHI's case. Ferroglobe PLC (NASDAQ:GSM) is the most popular stock in this table. On the other hand Community Bankers Trust Corp. (NASDAQ:ESXB) is the least popular one with only 3 bullish hedge fund positions. KVH Industries, Inc. (NASDAQ:KVHI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on KVHI, though not to the same extent, as the stock returned 7.5% during the first two months of the fourth quarter and outperformed the market.

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

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