Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe the hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in KB Financial Group, Inc. (ADR) (NYSE:KB)? The smart money sentiment can provide an answer to this question.
Is KB Financial Group, Inc. (ADR) (NYSE:KB) a great investment now? Hedge funds are betting on the stock. The number of long hedge fund positions increased by 3 recently. 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 Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT), Whole Foods Market, Inc. (NASDAQ:WFM), and Harley-Davidson, Inc. (NYSE:HOG) to gather more data points.
According to most market participants, hedge funds are perceived as worthless, old financial tools of yesteryear. While there are greater than an 8000 funds in operation today, Our experts hone in on the masters of this club, around 700 funds. These money managers control the majority of the smart money’s total asset base, and by paying attention to their unrivaled picks, Insider Monkey has unearthed a number of investment strategies that have historically beaten the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, let’s take a look at the fresh action surrounding KB Financial Group, Inc. (ADR) (NYSE:KB).
How have hedgies been trading KB Financial Group, Inc. (ADR) (NYSE:KB)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the number one position in KB Financial Group, Inc. (ADR) (NYSE:KB). Fisher Asset Management has a $9.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is William B. Gray of Orbis Investment Management, with a $5.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Dreman’s Dreman Value Management and Jane Mendillo’s Harvard Management Co.
Consequently, key hedge funds were breaking ground themselves. Clough Capital Partners, managed by Charles Clough, established the biggest position in KB Financial Group, Inc. (ADR) (NYSE:KB). Clough Capital Partners had $0.4 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.4 million position during the quarter. The following funds were also among the new KB investors: Ken Griffin’s Citadel Investment Group and Matthew Hulsizer’s PEAK6 Capital Management
Let’s go over hedge fund activity in other stocks similar to KB Financial Group, Inc. (ADR) (NYSE:KB). We will take a look at Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT), Whole Foods Market, Inc. (NASDAQ:WFM), Harley-Davidson, Inc. (NYSE:HOG), and POSCO (ADR) (NYSE:PKX). This group of stocks’ market caps are similar to KB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1.21 billion. That figure was just $22 million in KB’s case. Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) is the most popular stock in this table, while POSCO (ADR) (NYSE:PKX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks KB Financial Group, Inc. (ADR) (NYSE:KB) is even less popular than PKX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.