The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtKnoll Inc (NYSE:KNL) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Knoll Inc (NYSE:KNL) was in 11 hedge funds’ portfolios at the end of the first quarter of 2020. KNL has experienced a decrease in enthusiasm from smart money in recent months. There were 19 hedge funds in our database with KNL positions at the end of the previous quarter. Our calculations also showed that KNL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the latest hedge fund action encompassing Knoll Inc (NYSE:KNL).
What have hedge funds been doing with Knoll Inc (NYSE:KNL)?
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -42% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KNL over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D. E. Shaw’s D E Shaw has the biggest position in Knoll Inc (NYSE:KNL), worth close to $4.5 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is Renaissance Technologies, with a $3.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Chuck Royce’s Royce & Associates and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to Knoll Inc (NYSE:KNL), around 0.07% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to KNL.
Since Knoll Inc (NYSE:KNL) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers who sold off their full holdings heading into Q4. It’s worth mentioning that Richard Driehaus’s Driehaus Capital cut the largest stake of all the hedgies monitored by Insider Monkey, valued at close to $8.5 million in stock. Ira Unschuld’s fund, Brant Point Investment Management, also dropped its stock, about $4.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 8 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Knoll Inc (NYSE:KNL). We will take a look at Cohu, Inc. (NASDAQ:COHU), Quanterix Corporation (NASDAQ:QTRX), Luther Burbank Corporation (NASDAQ:LBC), and Tucows Inc. (NASDAQ:TCX). This group of stocks’ market caps are similar to KNL’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $18 million in KNL’s case. Quanterix Corporation (NASDAQ:QTRX) is the most popular stock in this table. On the other hand Luther Burbank Corporation (NASDAQ:LBC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Knoll Inc (NYSE:KNL) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately KNL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on KNL were disappointed as the stock returned 18.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.