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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Kimco Realty Corp (NYSE:KIM).
Kimco Realty Corp (NYSE:KIM) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Kimco Realty Corp (NYSE:KIM) was in 17 hedge funds' portfolios at the end of March. The all time high for this statistic is 28. There were 22 hedge funds in our database with KIM positions at the end of the fourth quarter. Our calculations also showed that KIM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 115 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.
George Soros of Soros Fund Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now we're going to analyze the latest hedge fund action surrounding Kimco Realty Corp (NYSE:KIM).
Do Hedge Funds Think KIM Is A Good Stock To Buy Now?
At first quarter's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards KIM over the last 23 quarters. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Kimco Realty Corp (NYSE:KIM), which was worth $36.4 million at the end of the fourth quarter. On the second spot was Royce & Associates which amassed $20.7 million worth of shares. Kettle Hill Capital Management, Adage Capital Management, and Soros Fund Management 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 Kettle Hill Capital Management allocated the biggest weight to Kimco Realty Corp (NYSE:KIM), around 1.81% of its 13F portfolio. Hill Winds Capital is also relatively very bullish on the stock, earmarking 0.77 percent of its 13F equity portfolio to KIM.
Due to the fact that Kimco Realty Corp (NYSE:KIM) has experienced falling interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of funds that slashed their full holdings last quarter. Interestingly, Ken Heebner's Capital Growth Management dropped the biggest position of the 750 funds watched by Insider Monkey, valued at an estimated $23.7 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $23.5 million worth. These moves are interesting, as total hedge fund interest fell by 5 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Kimco Realty Corp (NYSE:KIM) but similarly valued. These stocks are Oshkosh Corporation (NYSE:OSK), Autoliv Inc. (NYSE:ALV), New Fortress Energy Inc. (NASDAQ:NFE), CAE, Inc. (NYSE:CAE), Pearson PLC (NYSE:PSO), Genpact Limited (NYSE:G), and Casey's General Stores, Inc. (NASDAQ:CASY). This group of stocks' market caps resemble KIM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSK,26,416413,-14 ALV,20,813218,-6 NFE,12,30553,1 CAE,17,113000,7 PSO,6,19900,1 G,23,271528,-8 CASY,11,96510,-12 Average,16.4,251589,-4.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $252 million. That figure was $90 million in KIM's case. Oshkosh Corporation (NYSE:OSK) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 6 bullish hedge fund positions. Kimco Realty Corp (NYSE:KIM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KIM is 45.7. 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 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on KIM, though not to the same extent, as the stock returned 11.8% since Q1 (through July 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.