Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze KT Corporation (ADR) (NYSE:KT) from the perspective of those successful funds.
KT Corporation (ADR) (NYSE:KT) was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. KT has seen an increase in hedge fund sentiment recently. There were 8 hedge funds in our database with KT holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Kohl’s Corporation (NYSE:KSS), Ryanair Holdings plc (ADR) (NASDAQ:RYAAY), and Western Gas Partners, LP (NYSE:WES) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, we’re going to view the key action regarding KT Corporation (ADR) (NYSE:KT).
What have hedge funds been doing with KT Corporation (ADR) (NYSE:KT)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in KT at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital holds the largest position in KT Corporation (ADR) (NYSE:KT). Arrowstreet Capital has a $40.3 million position in the stock. Coming in second is Ernest Chow and Jonathan Howe of Sensato Capital Management, with a $21.8 million position; 4.6% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism contain David Iben’s Kopernik Global Investors, Israel Englander’s Millennium Management which is one of the 10 largest hedge funds in the world and Cliff Asness’ AQR Capital Management. We should note that two of these hedge funds (Sensato Capital Management and Kopernik Global Investors) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key money managers were leading the bulls’ herd. AQR Capital Management created the largest position in KT Corporation (ADR) (NYSE:KT) which had $4.5 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $0.7 million position during the quarter. The only other fund with a new position in the stock is Louis Navellier’s Navellier & Associates.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as KT Corporation (ADR) (NYSE:KT) but similarly valued. These stocks are Kohl’s Corporation (NYSE:KSS), Ryanair Holdings plc (ADR) (NASDAQ:RYAAY), Western Gas Partners, LP (NYSE:WES), and Sabre Corp (NASDAQ:SABR). This group of stocks’ market caps are similar to KT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KSS | 29 | 409994 | 1 |
| RYAAY | 24 | 474835 | 3 |
| WES | 8 | 35122 | 3 |
| SABR | 29 | 1947191 | -7 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $717 million. That figure was $93 million in KT’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand Western Gas Partners, LP (NYSE:WES) is the least popular one with only 8 bullish hedge fund positions. KT Corporation (ADR) (NYSE:KT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KSS might be a better candidate to consider taking a long position in.
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Disclosure: None
