Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 30 stock picks outperformed the S&P 500 Index by 4 percentage points through the middle of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is Kirby Corporation (NYSE:KEX) the right pick for your portfolio? Hedge funds are selling. The number of long hedge fund positions went down by 2 recently. Our calculations also showed that KEX isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the recent hedge fund action regarding Kirby Corporation (NYSE:KEX).
Hedge fund activity in Kirby Corporation (NYSE:KEX)
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KEX over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Diamond Hill Capital was the largest shareholder of Kirby Corporation (NYSE:KEX), with a stake worth $175.4 million reported as of the end of September. Trailing Diamond Hill Capital was Royce & Associates, which amassed a stake valued at $111.3 million. Polar Capital, D E Shaw, and Scopus Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Kirby Corporation (NYSE:KEX) has experienced a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers that elected to cut their entire stakes last quarter. Intriguingly, Clint Murray’s Lodge Hill Capital cut the biggest position of all the hedgies monitored by Insider Monkey, worth about $26.1 million in stock. Till Bechtolsheimer’s fund, Arosa Capital Management, also sold off its stock, about $19.2 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Kirby Corporation (NYSE:KEX) but similarly valued. These stocks are Highwoods Properties Inc (NYSE:HIW), Algonquin Power & Utilities Corp. (NYSE:AQN), Bank of the Ozarks (NASDAQ:OZK), and GW Pharmaceuticals plc (NASDAQ:GWPH). This group of stocks’ market values are closest to KEX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $257 million. That figure was $438 million in KEX’s case. GW Pharmaceuticals plc (NASDAQ:GWPH) is the most popular stock in this table. On the other hand Algonquin Power & Utilities Corp. (NYSE:AQN) is the least popular one with only 6 bullish hedge fund positions. Kirby Corporation (NYSE:KEX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GWPH might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.