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Hedge Funds Are Betting On Kinder Morgan Inc (KMI)

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Kinder Morgan Inc (NYSE:KMI).

Is Kinder Morgan Inc (NYSE:KMI) a buy right now? Investors who are in the know are becoming hopeful. The number of long hedge fund positions moved up by 15 during the third quarter. In this way, there were 68 funds from our database holding shares of Kinder Morgan at the end of September. However, we should point out that 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 Phillips 66 (NYSE:PSX), Target Corporation (NYSE:TGT), and BCE Inc. (USA) (NYSE:BCE) to gather more data points.

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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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With all of this in mind, we’re going to go over the latest action encompassing Kinder Morgan Inc (NYSE:KMI).

What have hedge funds been doing with Kinder Morgan Inc (NYSE:KMI)?

At the end of the third quarter, 68 funds tracked by Insider Monkey were long Kinder Morgan, an increase of 28% from the end of the second quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

KIM
When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the largest position in Kinder Morgan Inc (NYSE:KMI), worth close to $462.6 million, corresponding to 0.4% of its total 13F portfolio. The second largest stake is held by Bob Peck and Andy Raab of FPR Partners, with a $327 million position; the fund has 7.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain Stephen Mandel’s Lone Pine Capital, Robert Pitts’ Steadfast Capital Management and Israel Englander’s Millennium Management.

Now, key hedge funds were leading the bulls’ herd. Lone Pine Capital initiated the most valuable position in Kinder Morgan Inc (NYSE:KMI). Lone Pine Capital had $285.3 million invested in the company at the end of the quarter. Robert Pitts’s Steadfast Capital Management also made a $200.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Knauer and Mina Faltas’s Nokota Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Eric Mindich’s Eton Park Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Kinder Morgan Inc (NYSE:KMI) but similarly valued. We will take a look at Phillips 66 (NYSE:PSX), Target Corporation (NYSE:TGT), BCE Inc. (USA) (NYSE:BCE), and Infosys Ltd ADR (NYSE:INFY). This group of stocks’ market valuations are similar to KMI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSX 29 7315837 3
TGT 30 702816 -2
BCE 16 189689 1
INFY 20 822886 -3

As you can see these stocks had an average of 24 investors long their stocks and the average amount invested in these stocks was $2.26 billion. That figure was $2.84 billion in Kinder Morgan’s case. Target Corporation (NYSE:TGT) is the most popular stock in this table with 30 funds holding shares. On the other hand BCE Inc. (USA) (NYSE:BCE) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Kinder Morgan Inc (NYSE:KMI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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