It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of 4 percentage points during the first 9 months of 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Kearny Financial Corp. (NASDAQ:KRNY).
Kearny Financial Corp. (NASDAQ:KRNY) has experienced a decrease in activity from the world’s largest hedge funds in recent months. KRNY was in 13 hedge funds’ portfolios at the end of the second quarter of 2019. There were 16 hedge funds in our database with KRNY holdings at the end of the previous quarter. Our calculations also showed that KRNY isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are several methods market participants put to use to evaluate their stock investments. A couple of the most under-the-radar methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outclass the market by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the key hedge fund action encompassing Kearny Financial Corp. (NASDAQ:KRNY).
What does smart money think about Kearny Financial Corp. (NASDAQ:KRNY)?
At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the first quarter of 2019. On the other hand, there were a total of 19 hedge funds with a bullish position in KRNY a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in Kearny Financial Corp. (NASDAQ:KRNY), worth close to $82.5 million, corresponding to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Frederick DiSanto of Ancora Advisors, with a $14.5 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish consist of John D. Gillespie’s Prospector Partners, Michael Price’s MFP Investors and Richard Driehaus’s Driehaus Capital.
Since Kearny Financial Corp. (NASDAQ:KRNY) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds who were dropping their full holdings last quarter. Intriguingly, Michael A. Price and Amos Meron’s Empyrean Capital Partners sold off the biggest investment of the 750 funds watched by Insider Monkey, comprising an estimated $13.5 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund dropped about $0.3 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Kearny Financial Corp. (NASDAQ:KRNY). We will take a look at AtriCure Inc. (NASDAQ:ATRC), Tortoise Energy Infrastructure Corporation (NYSE:TYG), Summit Hotel Properties Inc (NYSE:INN), and Veracyte Inc (NASDAQ:VCYT). This group of stocks’ market valuations resemble KRNY’s market valuation.
|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 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $140 million in KRNY’s case. Veracyte Inc (NASDAQ:VCYT) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 1 bullish hedge fund positions. Kearny Financial Corp. (NASDAQ:KRNY) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately KRNY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); KRNY investors were disappointed as the stock returned -1.4% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey