Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside in these ignored corners of the equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
KapStone Paper and Packaging Corp. (NYSE:KS) shareholders have witnessed hedge fund interest in the stock stall recently, with ownership unchanged during the third quarter. At the end of this article we will also compare KS to other stocks including Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Cyberark Software Ltd (NASDAQ:CYBR), and NOW Inc (NYSE:DNOW) to get a better sense of its popularity.
Today there are dozens of formulas market participants put to use to size up stocks. A pair of the less known formulas are hedge fund and insider trading sentiment. Hedge fund experts at Insider Monkey have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a very impressive amount (see the details here).
Keeping this in mind, let’s take a peek at the fresh action regarding KapStone Paper and Packaging Corp. (NYSE:KS).
How have hedgies been trading KapStone Paper and Packaging Corp. (NYSE:KS)?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchnaged from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.
According to publicly available hedge fund holdings data compiled by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in KapStone Paper and Packaging Corp. (NYSE:KS). D E Shaw has a $47.8 million position in the stock, comprising 0.1% of its 13F portfolio. On D E Shaw’s heels is Joe Huber of Huber Capital Management, with a $24.1 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions encompass Youlia Miteva’s Proxima Capital Management, Steve Cohen’s Point72 Asset Management, and Jim Simons’ Renaissance Technologies.
Because KapStone Paper and Packaging Corp. (NYSE:KS) has experienced neutral sentiment from hedge fund managers, we can see that there lies a certain “tier” of funds that also elected to cut their full holdings in the third quarter. Intriguingly, Jacob Rothschild’s RIT Capital Partners sold off the biggest stake of the 700 funds watched by Insider Monkey, valued at close to $14.5 million in stock. Robert Polak’s fund, Anchor Bolt Capital, also sold off its stock, about $5.4 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to KapStone Paper and Packaging Corp. (NYSE:KS). These stocks are Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Cyberark Software Ltd (NASDAQ:CYBR), NOW Inc (NYSE:DNOW), and Education Realty Trust, Inc. (NYSE:EDR). All of these stocks’ market caps are similar to KS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $201 million, about 33% greater than the amount invested in KS. Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) is the most popular stock in this table. On the other hand Education Realty Trust, Inc. (NYSE:EDR) is the least popular one with only eight bullish hedge fund positions. Compared to these stocks KapStone Paper and Packaging Corp. (NYSE:KS) is more popular among hedge funds. Considering that hedge funds are fond of this stock, it may be a good idea to analyze it in detail and potentially include it in your portfolio.