In this article we will take a look at whether hedge funds think Kraton Corporation (NYSE:KRA) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Kraton Corporation (NYSE:KRA) a healthy stock for your portfolio? Investors who are in the know were becoming hopeful. The number of long hedge fund positions inched up by 6 lately. Kraton Corporation (NYSE:KRA) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic is 28. Our calculations also showed that KRA isn’t among the 30 most popular stocks among hedge funds (click for Q3 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. Now let’s take a peek at the latest hedge fund action regarding Kraton Corporation (NYSE:KRA).
Matthew Halbower of Pentwater Capital
Do Hedge Funds Think KRA Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KRA over the last 25 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.
Among these funds, Magnetar Capital held the most valuable stake in Kraton Corporation (NYSE:KRA), which was worth $84 million at the end of the third quarter. On the second spot was Pentwater Capital Management which amassed $36.5 million worth of shares. Millennium Management, Halcyon Asset Management, and Water Island Capital 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 Halcyon Asset Management allocated the biggest weight to Kraton Corporation (NYSE:KRA), around 4.18% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, earmarking 0.94 percent of its 13F equity portfolio to KRA.
As aggregate interest increased, specific money managers were breaking ground themselves. Magnetar Capital, managed by Alec Litowitz and Ross Laser, established the largest position in Kraton Corporation (NYSE:KRA). Magnetar Capital had $84 million invested in the company at the end of the quarter. Matthew Halbower’s Pentwater Capital Management also initiated a $36.5 million position during the quarter. The following funds were also among the new KRA investors: John Orrico’s Water Island Capital, Dmitry Balyasny’s Balyasny Asset Management, and Robert Emil Zoellner’s Alpine Associates.
Let’s now take a look at hedge fund activity in other stocks similar to Kraton Corporation (NYSE:KRA). These stocks are Malibu Boats Inc (NASDAQ:MBUU), Redwood Trust, Inc. (NYSE:RWT), Hyliion Holdings Corp. (NYSE:HYLN), The Bancorp, Inc. (NASDAQ:TBBK), Nano Dimension Ltd. (NASDAQ:NNDM), Sapiens International Corporation N.V. (NASDAQ:SPNS), and GoPro Inc (NASDAQ:GPRO). This group of stocks’ market values match KRA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MBUU | 21 | 125921 | 6 |
| RWT | 15 | 72958 | 3 |
| HYLN | 8 | 15080 | 3 |
| TBBK | 14 | 43813 | -2 |
| NNDM | 10 | 112880 | -1 |
| SPNS | 10 | 35400 | 1 |
| GPRO | 31 | 293185 | 3 |
| Average | 15.6 | 99891 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $265 million in KRA’s case. GoPro Inc (NASDAQ:GPRO) is the most popular stock in this table. On the other hand Hyliion Holdings Corp. (NYSE:HYLN) is the least popular one with only 8 bullish hedge fund positions. Kraton Corporation (NYSE:KRA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KRA is 73.7. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately KRA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KRA were disappointed as the stock returned 1.1% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.
Follow Kraton Corp (NYSE:KRA)
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Disclosure: None. This article was originally published at Insider Monkey.
