A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on KLA Corporation (NASDAQ:KLAC).
Is KLA Corporation (NASDAQ:KLAC) the right investment to pursue these days? The smart money was taking an optimistic view. The number of bullish hedge fund bets improved by 4 recently. KLA Corporation (NASDAQ:KLAC) was in 40 hedge funds’ portfolios at the end of March. The all time high for this statistic is 46. Our calculations also showed that KLAC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Phillip Gross of Adage Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the fresh hedge fund action encompassing KLA Corporation (NASDAQ:KLAC).
Do Hedge Funds Think KLAC Is A Good Stock To Buy Now?
At Q1’s end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards KLAC over the last 23 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in KLA Corporation (NASDAQ:KLAC) was held by Alkeon Capital Management, which reported holding $441.1 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $182.9 million position. Other investors bullish on the company included AQR Capital Management, Rokos Capital Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position One01 Capital allocated the biggest weight to KLA Corporation (NASDAQ:KLAC), around 7.44% of its 13F portfolio. Mondrian Capital is also relatively very bullish on the stock, dishing out 4.2 percent of its 13F equity portfolio to KLAC.
With a general bullishness amongst the heavyweights, specific money managers have jumped into KLA Corporation (NASDAQ:KLAC) headfirst. Rokos Capital Management, managed by Chris Rokos, established the biggest position in KLA Corporation (NASDAQ:KLAC). Rokos Capital Management had $108.4 million invested in the company at the end of the quarter. Canhui Ou’s One01 Capital also initiated a $16 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Tor Minesuk’s Mondrian Capital, and Chris Hohn’s TCI Fund Management.
Let’s go over hedge fund activity in other stocks similar to KLA Corporation (NASDAQ:KLAC). These stocks are Twitter Inc (NYSE:TWTR), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Canadian Pacific Railway Limited (NYSE:CP), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), The Kraft Heinz Company (NASDAQ:KHC), Relx PLC (NYSE:RELX), and Dollar General Corp. (NYSE:DG). This group of stocks’ market values are closest to KLAC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWTR | 107 | 4534754 | 29 |
| REGN | 39 | 1308238 | -7 |
| CP | 33 | 5908185 | 9 |
| SMFG | 14 | 88068 | 4 |
| KHC | 33 | 13334618 | -3 |
| RELX | 4 | 85198 | -4 |
| DG | 52 | 2341556 | -5 |
| Average | 40.3 | 3942945 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.3 hedge funds with bullish positions and the average amount invested in these stocks was $3943 million. That figure was $1204 million in KLAC’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 4 bullish hedge fund positions. KLA Corporation (NASDAQ:KLAC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KLAC is 52.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately KLAC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KLAC investors were disappointed as the stock returned -4% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Kla Corp (NASDAQ:KLAC)
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Disclosure: None. This article was originally published at Insider Monkey.
