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Hedge Funds Have Never Been This Bullish On Kelly Services, Inc. (KELYA)

At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Kelly Services, Inc. (NASDAQ:KELYA) was in 13 hedge funds’ portfolios at the end of the first quarter of 2019. KELYA investors should be aware of an increase in support from the world’s most elite money managers in recent months. There were 10 hedge funds in our database with KELYA holdings at the end of the previous quarter. Our calculations also showed that KELYA isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to view the fresh hedge fund action encompassing Kelly Services, Inc. (NASDAQ:KELYA).

What does smart money think about Kelly Services, Inc. (NASDAQ:KELYA)?

At Q1’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KELYA over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

KELYA_june2019

More specifically, Diamond Hill Capital was the largest shareholder of Kelly Services, Inc. (NASDAQ:KELYA), with a stake worth $6.4 million reported as of the end of March. Trailing Diamond Hill Capital was Arrowstreet Capital, which amassed a stake valued at $2.7 million. AQR Capital Management, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Kelly Services, Inc. (NASDAQ:KELYA). Arrowstreet Capital had $2.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Thomas Bailard’s Bailard Inc, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Kelly Services, Inc. (NASDAQ:KELYA) but similarly valued. These stocks are Tutor Perini Corp (NYSE:TPC), Enviva Partners, LP (NYSE:EVA), Natus Medical Inc (NASDAQ:BABY), and The Providence Service Corporation (NASDAQ:PRSC). This group of stocks’ market caps resemble KELYA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TPC 12 17648 5
EVA 7 89870 1
BABY 24 110207 9
PRSC 12 181177 -2
Average 13.75 99726 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $19 million in KELYA’s case. Natus Medical Inc (NASDAQ:BABY) is the most popular stock in this table. On the other hand Enviva Partners, LP (NYSE:EVA) is the least popular one with only 7 bullish hedge fund positions. Kelly Services, Inc. (NASDAQ:KELYA) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on KELYA as the stock returned 15.9% during the same time frame and outperformed the market by an even larger margin.

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

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