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

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Kirkland Lake Gold Ltd. (NYSE:KL).

Kirkland Lake Gold Ltd. (NYSE:KL) shareholders have witnessed a decrease in hedge fund interest recently. Kirkland Lake Gold Ltd. (NYSE:KL) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that KL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a look at the recent hedge fund action surrounding Kirkland Lake Gold Ltd. (NYSE:KL).

Eric Sprott Sprott Asset Management

Eric Sprott of Sprott Asset Management

Do Hedge Funds Think KL Is A Good Stock To Buy Now?

At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards KL over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in Kirkland Lake Gold Ltd. (NYSE:KL), worth close to $113.4 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Galibier Capital Management, managed by Joseph Sirdevan, which holds a $70.6 million position; 9.7% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism encompass Eric Sprott’s Sprott Asset Management, John Paulson’s Paulson & Co and Michael A. Price and Amos Meron’s Empyrean Capital Partners. In terms of the portfolio weights assigned to each position Galibier Capital Management allocated the biggest weight to Kirkland Lake Gold Ltd. (NYSE:KL), around 9.67% of its 13F portfolio. Sun Valley Gold is also relatively very bullish on the stock, setting aside 5.23 percent of its 13F equity portfolio to KL.

Since Kirkland Lake Gold Ltd. (NYSE:KL) has experienced declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of funds that slashed their entire stakes by the end of the third quarter. Intriguingly, Brandon Osten’s Venator Capital Management dropped the biggest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $5.4 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also said goodbye to its stock, about $5.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Kirkland Lake Gold Ltd. (NYSE:KL). We will take a look at Wix.Com Ltd (NASDAQ:WIX), ironSource Ltd. (NYSE:IS), East West Bancorp, Inc. (NASDAQ:EWBC), Cable One Inc (NYSE:CABO), Lennox International Inc. (NYSE:LII), Formula One Group (NASDAQ:FWONA), and Gaming and Leisure Properties Inc (NASDAQ:GLPI). All of these stocks’ market caps resemble KL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WIX 25 740850 -10
IS 29 726683 -3
EWBC 29 526433 5
CABO 26 585271 6
LII 26 492417 0
FWONA 18 257601 -4
GLPI 29 517286 2
Average 26 549506 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $550 million. That figure was $481 million in KL’s case. ironSource Ltd. (NYSE:IS) is the most popular stock in this table. On the other hand Formula One Group (NASDAQ:FWONA) is the least popular one with only 18 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 overall hedge fund sentiment score for KL is 40.1. 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately KL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KL investors were disappointed as the stock returned 1.3% since the end of September (through 12/31) 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.

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