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Hedge Funds Are Dumping Kirkland Lake Gold Ltd. (KL)

Is Kirkland Lake Gold Ltd. (NYSE:KL) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Kirkland Lake Gold Ltd. (NYSE:KL) was in 21 hedge funds’ portfolios at the end of the second quarter of 2019. KL has seen a decrease in support from the world’s most elite money managers recently. There were 25 hedge funds in our database with KL positions at the end of the previous quarter. Our calculations also showed that KL isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are a large number of gauges stock traders employ to evaluate publicly traded companies. A couple of the less utilized gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outpace the broader indices by a superb amount (see the details here).

KL_oct2019

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the key hedge fund action encompassing Kirkland Lake Gold Ltd. (NYSE:KL).

What does smart money think about Kirkland Lake Gold Ltd. (NYSE:KL)?

At Q2’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards KL over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Steven Cohen, Point72 Asset Management

More specifically, Renaissance Technologies was the largest shareholder of Kirkland Lake Gold Ltd. (NYSE:KL), with a stake worth $97.9 million reported as of the end of March. Trailing Renaissance Technologies was Polar Capital, which amassed a stake valued at $83.3 million. GLG Partners, Two Sigma Advisors, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Seeing as Kirkland Lake Gold Ltd. (NYSE:KL) has witnessed declining sentiment from the smart money, it’s easy to see that there was a specific group of funds that slashed their positions entirely by the end of the second quarter. Intriguingly, Israel Englander’s Millennium Management said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $21 million in stock. David Costen Haley’s fund, HBK Investments, also said goodbye to its stock, about $2.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds by the end of the second quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Kirkland Lake Gold Ltd. (NYSE:KL) but similarly valued. These stocks are Snap-on Incorporated (NYSE:SNA), AGNC Investment Corp. (NASDAQ:AGNC), Beyond Meat, Inc. (NASDAQ:BYND), and PulteGroup, Inc. (NYSE:PHM). This group of stocks’ market caps resemble KL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNA 25 567704 0
AGNC 23 80577 8
BYND 16 67057 16
PHM 31 838424 6
Average 23.75 388441 7.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $347 million in KL’s case. PulteGroup, Inc. (NYSE:PHM) is the most popular stock in this table. On the other hand Beyond Meat, Inc. (NASDAQ:BYND) is the least popular one with only 16 bullish hedge fund positions. Kirkland Lake Gold Ltd. (NYSE:KL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on KL, though not to the same extent, as the stock returned 4.5% during the third quarter and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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