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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on Knowles Corporation (NYSE:KN).
Is Knowles Corporation (NYSE:KN) a first-rate investment right now? Money managers are turning bullish. The number of bullish hedge fund positions went up by 4 lately. Our calculations also showed that KN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Rogers of Ariel Investments
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the latest hedge fund action regarding Knowles Corporation (NYSE:KN).
How have hedgies been trading Knowles Corporation (NYSE:KN)?
Heading into the fourth quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in KN a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Falcon Edge Capital was the largest shareholder of Knowles Corporation (NYSE:KN), with a stake worth $87.8 million reported as of the end of September. Trailing Falcon Edge Capital was Ariel Investments, which amassed a stake valued at $74.8 million. D E Shaw, Intrinsic Edge Capital, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Falcon Edge Capital allocated the biggest weight to Knowles Corporation (NYSE:KN), around 16.47% of its portfolio. 13D Management is also relatively very bullish on the stock, designating 4.46 percent of its 13F equity portfolio to KN.
Now, specific money managers have been driving this bullishness. Ardsley Partners, managed by Philip Hempleman, assembled the most valuable call position in Knowles Corporation (NYSE:KN). Ardsley Partners had $4.2 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also made a $2 million investment in the stock during the quarter. The following funds were also among the new KN investors: Richard Driehaus’s Driehaus Capital, Minhua Zhang’s Weld Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s go over hedge fund activity in other stocks similar to Knowles Corporation (NYSE:KN). These stocks are Columbia Financial, Inc. (NASDAQ:CLBK), First Majestic Silver Corp (NYSE:AG), TransAlta Corporation (NYSE:TAC), and Plexus Corp. (NASDAQ:PLXS). All of these stocks’ market caps match KN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLBK | 10 | 38284 | -2 |
| AG | 14 | 33132 | 5 |
| TAC | 7 | 30962 | -2 |
| PLXS | 8 | 58196 | 0 |
| Average | 9.75 | 40144 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $264 million in KN’s case. First Majestic Silver Corp (NYSE:AG) is the most popular stock in this table. On the other hand TransAlta Corporation (NYSE:TAC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Knowles Corporation (NYSE:KN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on KN, though not to the same extent, as the stock returned 7.7% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
