Should You Avoid KapStone Paper and Packaging Corp. (KS)?

Seeing as KapStone Paper and Packaging Corp. (NYSE:KS) has weathered declining sentiment from hedge fund managers, we can see that there is a sect of hedge funds that elected to cut their positions entirely by the end of the third quarter. Interestingly, Millennium Management cut the largest call options stake of the 700 funds followed by Insider Monkey, valued at close to $2 million in stock (while retaining its aforementioned long position). Paul Orlin and Alex Porter’s fund, Amici Capital, also sold off its stock, about $2 million worth.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as KapStone Paper and Packaging Corp. (NYSE:KS) but similarly valued. These stocks are WestAmerica Bancorp. (NASDAQ:WABC), Pacira Pharmaceuticals Inc (NASDAQ:PCRX), SUPERVALU INC. (NYSE:SVU), and Apollo Investment Corp. (NASDAQ:AINV). This group of stocks’ market valuations are closest to KS’s market valuation.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $164 million in KS’s case. SUPERVALU INC. (NYSE:SVU) is the most popular stock in this table. On the other hand WestAmerica Bancorp. (NASDAQ:WABC) is the least popular one with only 6 bullish hedge fund positions. KapStone Paper and Packaging Corp. (NYSE:KS) 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 SVU might be a better candidate to consider taking a long position in.

Disclosure: None