It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in KBR, Inc. (NYSE:KBR).
Is KBR, Inc. (NYSE:KBR) a healthy stock for your portfolio? Money managers are turning bullish. The number of long hedge fund bets increased by 1 lately. KBR was in 25 hedge funds’ portfolios at the end of the third quarter of 2016. There were 24 hedge funds in our database with KBR holdings at the end of the previous quarter. At the end of this article we will also compare KBR to other stocks including Groupon Inc (NASDAQ:GRPN), Balchem Corporation (NASDAQ:BCPC), and Western Refining, Inc. (NYSE:WNR) to get a better sense of its popularity.
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.
With all of this in mind, we’re going to take a glance at the recent action surrounding KBR, Inc. (NYSE:KBR).
What have hedge funds been doing with KBR, Inc. (NYSE:KBR)?
Heading into the fourth quarter of 2016, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, up 4% from the second quarter of 2016. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Huber Capital Management, managed by Joe Huber, holds the number one position in KBR, Inc. (NYSE:KBR). According to regulatory filings, the fund has a $161.7 million position in the stock, comprising 6.4% of its 13F portfolio. Sitting at the No. 2 spot is Pzena Investment Management, run by Richard S. Pzena, which holds a $72.2 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism consist of Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Chuck Royce’s Royce & Associates.