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Did Hedge Funds Make The Right Call On Kirby Corporation (KEX) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtKirby Corporation (NYSE:KEX) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Kirby Corporation (NYSE:KEX) worth your attention right now? The best stock pickers were selling. The number of long hedge fund positions were cut by 5 lately. Our calculations also showed that KEX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). KEX was in 21 hedge funds’ portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with KEX positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to review the new hedge fund action surrounding Kirby Corporation (NYSE:KEX).

How have hedgies been trading Kirby Corporation (NYSE:KEX)?

At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in KEX a year ago. So, let’s examine 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, Ric Dillon’s Diamond Hill Capital has the most valuable position in Kirby Corporation (NYSE:KEX), worth close to $116.2 million, accounting for 0.8% of its total 13F portfolio. On Diamond Hill Capital’s heels is David Greenspan of Slate Path Capital, with a $56.3 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Chuck Royce’s Royce & Associates, Brian Gootzeit and Andrew Frank’s StackLine Partners and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position StackLine Partners allocated the biggest weight to Kirby Corporation (NYSE:KEX), around 16.03% of its 13F portfolio. Slate Path Capital is also relatively very bullish on the stock, setting aside 4.32 percent of its 13F equity portfolio to KEX.

Since Kirby Corporation (NYSE:KEX) has faced falling interest from the aggregate hedge fund industry, we can see that there were a few fund managers that slashed their full holdings last quarter. Intriguingly, Alexander Mitchell’s Scopus Asset Management sold off the biggest position of all the hedgies watched by Insider Monkey, totaling an estimated $55 million in stock, and Robert Pohly’s Samlyn Capital was right behind this move, as the fund dumped about $40.2 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Kirby Corporation (NYSE:KEX) but similarly valued. These stocks are The Brink’s Company (NYSE:BCO), OneMain Holdings Inc (NYSE:OMF), Synovus Financial Corp. (NYSE:SNV), and Essent Group Ltd (NYSE:ESNT). This group of stocks’ market caps are closest to KEX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BCO 24 275433 0
OMF 34 221371 -5
SNV 33 228467 -2
ESNT 26 196484 -10
Average 29.25 230439 -4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $288 million in KEX’s case. OneMain Holdings Inc (NYSE:OMF) is the most popular stock in this table. On the other hand The Brink’s Company (NYSE:BCO) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Kirby Corporation (NYSE:KEX) is even less popular than BCO. Hedge funds dodged a bullet by taking a bearish stance towards KEX. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but managed to beat the market by 17.1 percentage points. Unfortunately KEX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); KEX investors were disappointed as the stock returned 8.9% since Q1 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.