Is KKR Financial Holdings LLC (NYSE:KFN) Going to Burn These Hedge Funds?

KKR Financial Holdings LLC (NYSE:KFN) was in 17 hedge funds’ portfolio at the end of December. KFN investors should be aware of an increase in enthusiasm from smart money lately. There were 15 hedge funds in our database with KFN holdings at the end of the previous quarter.

In the 21st century investor’s toolkit, there are plenty of gauges investors can use to analyze stocks. Two of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a superb margin (see just how much).

KKR Financial Holdings LLC (NYSE:KFN)

Equally as key, optimistic insider trading sentiment is another way to parse down the world of equities. As the old adage goes: there are a variety of reasons for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this method if piggybackers understand where to look (learn more here).

Consequently, let’s take a look at the key action encompassing KKR Financial Holdings LLC (NYSE:KFN).

Hedge fund activity in KKR Financial Holdings LLC (NYSE:KFN)

In preparation for this year, a total of 17 of the hedge funds we track were bullish in this stock, a change of 13% from the previous quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Leon Cooperman’s Omega Advisors had the biggest position in KKR Financial Holdings LLC (NYSE:KFN), worth close to $147 million, accounting for 2.7% of its total 13F portfolio. The second largest stake is held by Cobalt Capital Management, managed by Wayne Cooperman, which held a $35 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Anthony Bozza’s Lakewood Capital Management, Chuck Royce’s Royce & Associates and Bill Miller’s Legg Mason Capital Management.

As one would reasonably expect, key money managers were leading the bulls’ herd. Wexford Capital, managed by Charles Davidson, assembled the most outsized position in KKR Financial Holdings LLC (NYSE:KFN). Wexford Capital had 2 million invested in the company at the end of the quarter. Carl Tiedemann and Michael Tiedemann’s TIG Advisors also initiated a $1 million position during the quarter. The following funds were also among the new KFN investors: John Overdeck and David Siegel’s Two Sigma Advisors and John A. Levin’s Levin Capital Strategies.

What do corporate executives and insiders think about KKR Financial Holdings LLC (NYSE:KFN)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past 180 days. Over the latest 180-day time period, KKR Financial Holdings LLC (NYSE:KFN) has experienced 2 unique insiders buying, and 3 insider sales (see the details of insider trades here).

With the returns exhibited by Insider Monkey’s research, everyday investors should always pay attention to hedge fund and insider trading activity, and KKR Financial Holdings LLC (NYSE:KFN) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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